As inter­est rates have dropped to his­toric lows and stayed there, some retirement plan­ning benchmarks have lost their rel­evance. In this environment, many retirees find Certificates of Deposit don’t provide enough income, even if they are safe. And retirees who planned to “spend down” their as­sets using the “4% rule” are starting to worry about running out of mon­ey.

(The 4% rule is an assumption that retirees can safely draw down 4% of their retirement accumula­tion, plus a little more, each year to account for inflation. According to the 4% rule, first devised by William Bengen, a California financial plan­ner, this format offers a reasonable expectation that retirees will not ex­haust their funds for at least three decades, even if the actual returns from their retirement portfolio fluc­tuate over time.)

Today, several factors have up­ended the 4% rule. Low yields on the portion of the portfolio required to provide ongoing income have ei­ther meant more assets committed to income instruments, or required liquidation of principal. Either ac­tion leaves less for long-term invest­ments that offer the promise of re­turns great enough to sustain a lifetime of distributions.

Closely connected to the issue of fewer funds available for long-term investment are the losses that many recent retirees sustained in the early years of their retirement. During ac­cumulation, the sequence of gains or losses doesn’t impact the final accumulation; any order of identi­cal gains and losses will produce the same result. But when one is with­drawing funds, losses sustained ear­ly in the sequence can decimate a portfolio’s ability to provide a life­time income.

For those whose retirement plans are grounded in the 4% rule, the only fixes are working longer to increase the principal or planning to receive less income. These aren’t exactly win-win choices. But they do illustrate the potential short­comings of trying to accomplish a secure retirement using just one format (a retirement plan).

Many times, coordinating sev­eral diverse assets can deliver bet­ter retirement results. A prime example of this coordinating concept is making permanent life insurance part of one’s retire­ment plan. In the 4% approach, the untouched principal serves as insurance for future income dis­tributions. This creates an ongo­ing tension between enjoying to­day’s benefits and worrying about whether today’s enjoyment jeop­ardizes future solvency. By con­trast, having a true life insurance benefit in place allows for greater financial certainty. This certain­ty means retirees have the ability to use retirement assets in ways that would not be possible if the insurance did not exist.

By providing a known amount of money for a certain event (death), the life insurance policy can deliver income tax– free funds for inheritance, which means other accumulation ac­counts do not have to be con­served for this purpose. In the event of terminal or chronic ill­ness, the cash value and a per­centage of the death benefit may be accessed with a long-term care rider. Again, this frees up more funds for income. These strate­gies involving life insurance as a “last asset” make it possible to “spend down” other assets during one’s lifetime, thus maximizing their present financial value.

Because of the unique benefits of permanent life insurance in a com­prehensive retirement and estate plan, financial professionals often re­fer to it as a “permission slip” because the life insurance allows for confident consumption of accumulated assets.

The permission-slip benefits of permanent life insurance are so ex­pansive it is not uncommon for many individuals to obtain cover­age in their 60s and 70s as they be­gin retirement. “I never thought I would be buying life insurance in retirement” is a common refrain. But waiting until just before retire­ment to obtain a permission slip has some hazards. Health and insurabil­ity are major concerns. Annual pre­miums will be significantly higher. A prudent approach is to establish a life insurance plan today that can be structured to meet tomorrow’s circumstances as well. If you want to fully enjoy the rewards of saving, make sure to include a permission slip for spending.

Elozor Preil is Managing Director at Wealth Advisory Group and Regis­tered Representative and Finan­cial Advisor of Park Avenue Securi­ties LLC (PAS). He can be reached at [email protected]. See www. wagroupllc.com/epreil for full dis­closures and disclaimers. Guardian, its subsidiaries, agents or employ­ees do not give tax or legal advice. You should consult your tax or le­gal advisor regarding your individ­ual situation.

By Elozor M. Preil