Harry was the kind of client who drove financial advisors crazy. Not because he had a bad attitude … not because he was flaky or bad at investing… Harry was quite the opposite — a cheery, intelligent older fellow who was smart as a whip and had a solid nest egg saved up. And that’s what drove them all nuts. Because he was clearly a bright guy who understood their advice, and yet he continued to ignore it without fail.

His disagreement always started with something called “The 4% Rule,” that’s practically a religion in modern retirement planning. The 4% Rule dictates that you can liquidate a maximum of 4% of your portfolio in your first year of retirement. Then the next year, you adjust that 4% for inflation, and that’s your number. Keep doing that year-in and year-out, and you’ve got a strategy for stretching your savings out at least 30 years.

It’s a great rule of thumb, too. The 4% rule accounts for everything from the average growth of the stock market to the risk of potential downturns, giving you a practical formula for calculating how much you’ll need to retire comfortably. For example, if you’d like to retire with $100,000 per year in income, then you’ll need to have $2.5 million in your account (25 multiplied by that annual income gives you 4%).

Harry knew about this rule. He certainly understood the 4% Rule (I’m sure he had at least a dozen advisors explain it to him over the years). He just didn’t believe in it, per se.

Time and again, Harry’s advisors would review his portfolio … they’d warn him about owning higher-volatility stocks while living on a fixed income, and they’d insist that he couldn’t withdraw more than 4% like he’d been doing. Then, shortly afterwards, Harry would fire them.

It wasn’t until he met my mentor — who specialized in whole life insurance policies — that Harry finally met an advisor who was speaking his language.

As my mentor explained it, Harry was using his own well-funded whole life insurance policy as a tool to help him break through the “4% ceiling” that limits so many Americans in retirement. In practice, Harry was liquidating closer to 6% of his portfolio each year — sometimes even as high as 7%. That’s upwards of 75% more annual income than another retiree might expect from a similar nest egg.

Harry accomplished this by breaking yet another sacred rule in financial planning; the ubiquitous “60/40” rule. That one dictates how investors should hold 60% of their portfolio in stocks, and the remaining 40% in bonds. Harry had a little over half that percentage in bonds, and the rest concentrated in high-tech growth stocks — not the blue chip dividend stocks you’d usually expect to see in a retiree’s portfolio.

Harry made a fortune as tech stocks boomed as a result. He spent the windfall living his retirement to the fullest, paying for lavish gifts, European vacations, and the best country club membership in his state.

Of course, you may have already spotted the same “fatal flaw” in Harry’s plan that was pointed out by so many of his financial advisors. Namely, “what does Harry do when the market crashes?”

Even the most established tech stocks on the market have seen their share prices crash substantially during market downturns. Apple’s stock notoriously lost 60% of its value during the 2007 crash, before surging higher in 2009. Then in early 2025, shares lost 30% of value all over again.

Big tech stocks often recover from these kinds of crashes, but it can take years to get back to square one. By that same token, you’d be locking in your losses if you did sell during one of those major downturns — essentially wiping out years of gains and potentially derailing your long-term investment strategy.

The traditional 4% answer to this question is to diversify. To invest your money in a different mix of stocks and bonds, like so many advisors tried to tell him. That way, he could potentially liquidate treasuries to minimize losses and stay on track. It’s a more stable strategy overall, but it would’ve limited Harry to living off that 4% … and he wanted more.

So Harry started taking a more active approach to investing — and he started paying into an amazing whole life insurance policy. Because even though life insurance is not an investment, you can still use it to backstop an investment portfolio…

Because the value of your whole life insurance policy and the dividends being paid into it are independent of broad market movements. Whether the markets go up or down, your policy will continue to grow as dictated by your policy schedule over the coming years.

That means even though Harry’s portfolio was relatively light on bonds, he still had a substantial safe haven investment that was continuously growing through good markets and bad.

What’s more, it’s also possible to borrow against the cash value of your whole life insurance policy once it’s been sufficiently funded. Since these loans are secured by the cash value of your policy, they typically come with favorable rates, fast approval, and maximum flexibility in terms of repayment.

As a result, Harry could avoid selling off stocks after a steep downturn — instead opting to take out a large loan against his life insurance’s cash value and cancel a vacation or two while he waited for the market to turn around. After stocks rebounded, he’d eventually close a few positions and cover the balance of his loan.

The net result of all this was that Harry’s portfolio grew in as close to a steady upward line as the market would allow. He was never forced to liquidate a position before it was ready. And he never panic sold, partially because there’s no need to panic with a multi-million-dollar whole life insurance policy on tap. So his wealth really compounded uninterrupted.

And since he had a stout volatility buffer between his stock portfolio and a potential market crash, he was able to lean into higher-return investments — making more out of his hard-earned savings and improving both the quality of his retirement and the legacy he left behind for his family.

Key Takeaways

• Whole life insurance can serve as a powerful volatility buffer, providing consistent growth independent of stock market fluctuations.
• Using a well-funded whole life insurance policy enables retirees to safely withdraw more than the traditional 4% rule, achieving higher income with less risk.
• Life insurance cash value loans offer flexible, low-rate liquidity during market downturns, preventing forced asset sales and preserving portfolio growth.
• Breaking traditional portfolio allocation rules, like the 60/40 stock/bond split, can be feasible with proper risk mitigation via life insurance strategies.
• Combining life insurance with a growth-oriented stock portfolio supports sustained wealth continuity and an enhanced retirement lifestyle.
• This approach also helps safeguard legacy goals by reducing the risk of panic selling and portfolio depletion during market crashes.

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