What do you think about this statement?

"At retirement the money can be used for retirement income tax free if done correctly after using it all along the way for buying all the necessities of life."

I've seen this statement before related to the Cash Value of whole life policies and how they can be used for retirement.
What's EXTREMELY frustrating is that it's NEVER discussed what the correct way to do it actually is....

So have others seen that as well or have you been lucky enough to see how.

It works best when the withdrawals are made in increments to supplement income. Lump sums do work, but they will shorten the span and ultimately the total withdrawals made.

The first withdrawals are made by doing cash surrenders down to your cost basis. These are tax free because you haven't taken out any gains. Because you are surrendering some of the policy when you withdraw the cash, the corresponding cost of insurance that the cash was supporting is eliminated.

Once you reach the cost basis, then you take loans on the remaining cash values. These are tax free because you aren't making actual withdrawals, but instead using your cash account as collateral.

Ultimately, you have to leave enough cash intact in the policy to cover "the spread" or the rate between the loan rate and the growth rate of the cash in the policy. This is usually about 1% on most whole life policies. That 1% does accrue, but is paid by the cash you left untouched.

Thanks. That actually makes some sense to me.

I had never actually figured on "cashing out" some of the policy to the cost basis but I can see how that works.

I've heard of selling back the PUAs - sounds like it's basically the same thing.