@evanburnside12 No I’m rejecting that WL provides needs better than retirement accounts. Retirement accounts are long term accounts. 20-30 years. But then you proceed to talk about short term problems. If you want to argue WL provides financially better than short term accounts then sure you have more of an argument. But that wasn’t your argument. You’re comparing apples to oranges really.
But let’s go there were you want to go…
How is whole life helping me save on taxes? My wife and I contribute the max amount to our 401k and SoloK. That saves us about $10k in taxes a year. Over 5 years that’s 50k in taxes saved. So instead of my tax deductible retirement account, since WL is better financially as you put, I put to a whole life policy which still creates a tax environment to me to pay more in taxes which leads me to having less money in my pocket which leads to when a big purchase comes about, I need to borrow more from my cash value policy. That WL not only would have to beat the interest I would pay, but also that $50k difference (in 5 years). So with even if I do have a lower interest from the WL, I have to borrow more from my policy than I would have at the bank. Rather than save the money from taxes and my other areas (even if I earn less interest) and save it away. So when that big purchase does come, even if the interest is a little lower, I borrow less than what I would have had to from paying in to the WL policy.
I agree that debt should be taken care of first. Once paid off. But many places should be taken care of. Retirement accounts as one should be taken care of.
You say you can’t access retirement accounts. That’s not totally true. Many 401ks offer loans. Roth IRAs you can withdraw the contributions. Both without hitting IRS penalty or taxation. You used houses as an example. First time home buyers can absolutely touch their retirement accounts without penalty. Ifs it’s a Roth and been established for 5 years, not only can they touch it for the house, they can touch it tax free.
You say a conventional bank loan is too expensive. Even in todays environment getting a loan from the bank, for say a car, is cheaper interest then what it would be to take out of cash value for me. And that’s assuming the cash isn’t there. But pay a car off and keep paying the note to yourself. Not saying don’t make big purchases. But be smart about big purchases. Will a car last 50 years? Not today’s cars. Will they last 10-15? Sure unless wrecked and then still that’s what we have auto insurance for. Home repair again what are we talking about? Washer goes out, not a major purchase really. Roof needs to be fixed. There’s grants and avenues also. I just had to have my AC replaced in my house. 11k just this December 2023. Again, was still lower interest on a loan for it than it would be to take out of my cash value. My interest is 0% for two years. If I did 2 years or more it would have been 2.86%
You say savings doesn’t pay enough. Thats true in low interest times. I’m earning 5.5 and 6% on my savings and checking right now. But the flexibility to move and make more money in favorable market times with my non qualified during low interest times also. 2022 I earned 3.61% moving out of the market including my 5.5 from my saving. Then dollar cost averaged back in in 2023 and earned 18.7% last year. I’m up over 14% YTD this year. Still with 30k sitting in cash earning 5.5% and 6% in two different accounts. Since beginning of 2022 I have a cumulative return of 22.6%. That’s with a bad market. Would WL have done that for me?