Retire on renewals + avoid self employment

[VolAgent]

Agents who plan on retiring off their renewals are foolish. Especially senior market agents. Aren’t some of those customers that you sold older than you? Don’t the renewals end when the sigh up elsewhere or die? Do you want your retirement income to dwindle down each year you get older and less able to work your book?

If you think working your huge base of Medicare clients is “retirement” you are foolish. It’s hard work. And once you quit working it and stop working (really retire) it will definitely pay huge money into your retirement for a number of years. But it will get smaller every year. And eventually become minute.

Agents with brains retire right. They save for retirement. They sell themselves an annuity every year. Or they invest in the market. Or they buy rental properties. Or do something that makes sense so they can retire in style someday. Putting all your eggs in the “retiring off your renewals” or the even crazier one “retiring off building a down line” is fools gold.

I believe this is a huge mistake that many business owners make, they look at their business as their retirement. And while a thriving business does have value, it is putting all your eggs in one basket. That is contrary to any and all sound investment advice.

 

[walthamny]

This is why I like building my AUM business on the side. It has a lot more resale value and it wont go away right away at retirement. Now if you build your business on mortgage protection and FE, there is not much value at retirement. If you build your business with cash value life insurance, again you have options in retirement. You can slowly work less and less and keep your renewals for a long time. Or your business will have some value even if you can't transfer the contract or the company pulls an Ohio National on you.

 

[Allen Trent]

This is why I like building my AUM business on the side. It has a lot more resale value and it wont go away right away at retirement. Now if you build your business on mortgage protection and FE, there is not much value at retirement. If you build your business with cash value life insurance, again you have options in retirement. You can slowly work less and less and keep your renewals for a long time. Or your business will have some value even if you can't transfer the contract or the company pulls an Ohio National on you.

that isn't really how some renewals on Life insurance work or play out, even on cash value plans. most pay new comm the 1st year, then pay renewals for 7-10 years, then service fees after that. An agent is generally only vested in the new & renewal, not the service fees. So, historically, we are least productive writing new business in our final years of working. Unless you were a big writer in those final years, there may be little to no renewals if you phase out of production over your final 5-10 years. Service fees will go to the next agent that takes over the accounts or not be paid at all if the carrier takes servicing in house after retirement.

now, AUM, if you are looking at the best way to boost income, increase sale-ability of your business & cost the client the maximum amount over the years they have investments, AUM is the best way to go

 

[DHK]

Why retire?

 

[somarco]

Ohio National. Lots of ways to get screwed on that residual income.

https://insurancenewsnet.com/innart...onal-could-be-just-the-beginning#.W-SP9YFKg3F

 

[junkman]

I remember 1 GA sold his life block to an agent that was supposed to handle the business and pay him out of the renewals. The new agent simply replaced as many contracts as possible generating 1st yr commission and renewals that weren't covered under the agreement.

Another agent continued to drive around the country in his RV visiting friends that were also clients. He'd drop by the office with a stack of apps for the office manager to process. Relying on continued sales and the agent's long relationships worked.

Relying on renewals and not working did not. Things are changing especially in the health markets and all of the ongoing commissions could go away tomorrow depending on what the laws are. Carriers will do away with agents at the 1st opportunity - witness the $0 commission on ACA business.

 

[Rearden]

Agents who plan on retiring off their renewals are foolish. Especially senior market agents. Aren’t some of those customers that you sold older than you? Don’t the renewals end when the sigh up elsewhere or die? Do you want your retirement income to dwindle down each year you get older and less able to work your book?

If you think working your huge base of Medicare clients is “retirement” you are foolish. It’s hard work. And once you quit working it and stop working (really retire) it will definitely pay huge money into your retirement for a number of years. But it will get smaller every year. And eventually become minute.

Agents with brains retire right. They save for retirement. They sell themselves an annuity every year. Or they invest in the market. Or they buy rental properties. Or do something that makes sense so they can retire in style someday. Putting all your eggs in the “retiring off your renewals” or the even crazier one “retiring off building a down line” is fools gold.

Yes - diversify your commission income out of the insurance business.

I've talked to so many health insurance agents living off of six-figure renewals in the early aughts that banked on renewal income to take them through retirement.

Guess how well that worked out?

 

[PCBI]

Disagree bigly

Live as a minimalist and its very doable. Matters what your lifestyle happens to be. Lets crynch some #s

56 years old retires w 45,000 renewals. Needs 30,000 net a year to keep retired to pay bills. 40,000 self employment Fed and state all have to be paid. Single deduction 12,000 so immediately tax bracket 10% @28,000 taxable income minus 7% taxable for Self emplyment. If u work out of house 20% writeoff home business if u still work ur book as a manager not active building a business.

As renewals begin to dwindle so do ur taxes. Button up ur out of pocket like fees to hungry S corporate accountantants talkn like u should stay incorporated bc if Self employment taxes. That alone could save u 13,000 a year and DIY qtrly urself. Open a SEP and evaluate EOY what contributions u want to make to keep taxes manageable in whatever bracket.

Finally as u see your renewals dwindle as u saves 250,000 in the kitty to age 62 its time!
Monthly income

1. 1,150.00 Social Sec income
2. 1,400.00 Immediate annuity
3. 360.00 Reverse Mortgage
4. 1,000 Book of Biz renewals

4,000.000 Monthly Income for life

GLTU

I believe this is a huge mistake that many business owners make, they look at their business as their retirement. And while a thriving business does have value, it is putting all your eggs in one basket. That is contrary to any and all sound investment advice.

 

[junkman]

PCBI, see how that works for you when renewals drop to $0 because of law changes and old policies no longer being relevant. Stuff happens. Money is a good insulator from all but health issues and can lessen the load of those - but try it and report back how it works.

I'm happy living in a tent in the woods. Unfortunately, would be sleeping by myself as wife won't go there (for long).

 

[PCBI]

IRS regs state continued renewals or extended earnings must be reported by carriers on 1099 as "miscellaneous" income, just as is done while you are still producing. So, it is still considered business income & subject to FICA & self employment tax. Is retirement income from an insurance agent subject to social s... - Accountants Community

Looks like it. If IRS is gonna tax 1099 renewals then business expense will still be Schedule C. They cannot have their cake and eat it.