Is life insurance better for retirement than a Roth IRA?

Although you can consider purchasing life insurance for retirement savings, it might not be your best option if your objective is to build a nest egg. However, it’s an excellent choice if you already have a Roth IRA and have maximized your contributions for the year.

What is the difference between life insurance and a Roth IRA?

Both are solid investment options, but there are essential differences between life insurance vs. a Roth IRA. Life insurance’s primary advantage is providing a death benefit to your beneficiaries after you die. Although some policy types include a cash value component, it’s not guaranteed and may yield lower returns. A Roth IRA’s primary focus is to establish retirement funds. Although you can only contribute a maximum of $6,000 a year ($7,000 if you’re over 50), your money grows tax-free. Once you reach 59 ½, you can withdraw from your account without worrying about income tax.

Roth IRA vs. Life Insurance: Which One Is Better for Retirement?

About Mark Fitzpatrick

Mark Fitzpatrick is a senior content director at MoneyGeek with over five years of experience analyzing the insurance market, conducting original research and creating content that can be personalized for every buyer. He has been quoted on insurance topics in several publications, including CNBC, NBC News and Mashable.

Mark earned a master’s degree in Economics and International Relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his economics and insurance knowledge to bring transparency around financial topics and help others feel confident in their money moves.

sources

IRS. "Retirement Topics — IRA Contribution Limits." Accessed October 12, 2022.

Compare Rates and Save On Life Insurance

Life Insurance vs. Roth IRA: Which One Is Better for Retirement?

On This Page

sources