No. of Recommendations: 5
According to Ray's spreadsheet (which shows calculations and assumptions, and can be adjusted), even when you go 50/50 S&P 500/US Treasuries (thus 'reserving' 50% of the retirement funds), the IUL still loses to the S&P/Treasury strategy 91% of the time, and overall the S&P/Treasury strategy ends up with $1.023 million vs. $586k for the IUL strategy.

Based on Ray's numbers, I do not see how an IUL provides a better risk factored return.

This is the risk we are trying to mitigate against:

1) A catastrophic life event happens
2) The catastrophic life event (CLE) occurs during a large market drop
3) The CLE is costly enough to wipe out the traditional B&h investor
4) BUT not so costly that it wipes out the IUL investor

An IUL is superior to traditional buy and hold when all of those conditions are met. The odds of all those things happening are astronomical, and dependent on the size of the CLE.

But if no CLE happens and you emerge on the other side unscathed, assuming a 4% SWR, the 50/50 blend investor gets $40K a year. The IUL investor gets $24K/year, or has to continue working more years before retirement. That is a huge downgrade in lifestyle to prevent something that is almost theoretically impossible.
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