inflation

How to Protect Your Retirement Savings

When it comes to financial planning, we all have one end goal in mind. That’s retirement. If you’re concerned about whether or not you’re going to be able to reach your retirement goals, no matter your age, this is for you. In this blog post, we will talk about the roadblocks that could be holding you back from reaching your retirement goals.

For the past thirty seven years as a financial services professional, when people come to us with their yet to be taxed IRA or 401K statements, they are generally shocked when they find out how much they have to pay in taxes.

Why is that so? It is because that’s not what they were told throughout their whole working career. They were told that during retirement, they would be in a lower tax bracket, but that’s not the case. You may be wondering why?

It was as if they were traveling down this road towards retirement with one foot on the gas pedal and one foot on the brake. They were setting aside as much money as they possibly could into their IRA or 401k or 403B, that’s the foot on the gas pedal. At the same time they were paying down their mortgage while watching their kids grow up and leave home. They lose those deductions by the time they reach retirement. They just can’t defer income into the future and eventually they lose those deductions. That’s the other foot on the brake.

If you’re traveling down a road with one foot on the gas pedal and the other on the brakes, are you making any progress?

Aside from losing all of your deductions, there is this ever changing tax code that we have to consider. There’s this old saying in Washington, “If you’re not at the table in Washington, you’re on the menu”. When’s the last time you were at the table in Washington? As for me, I’ve never been there.

Our country has $29 trillion in debt. Clearly we have a problem. But every time they meet in Washington and pass a new bill, it seems like they just keep on increasing spending like a drunken sailor. Now let me ask you this. If you have a spending problem or a debt problem, does it make sense to increase spending? If they’re not going to address the issue, then there’s only two ways the government could respond to try to fix this problem.

* Legislatively. They will increase taxes. How will this affect your retirement?
* Administratively. They can print more money and when they do, it results in inflation. What does inflation do to the value of your savings in retirement?

We call inflation the stealth tax. It subtly eats away the buying power of  money. You don’t even realize it most of the time but this is what inflation is doing to our cash value. Right now in 2022, it is blatant what inflation is doing to our money. But we don’t realize that the value of the dollar is decreasing little by little over time. The moment we get to retirement, it’s also very blatant that the buying power of our dollar is ever decreasing due to inflation.

When people come to us with their yet to be taxed retirement plans astounded as to how much they have to pay in taxes, when we haven’t even addressed the inflation issue, what are our options? Many don’t realize that after you earn your income and you pay your tax, whether or not you pay tax again on that money, the rest of your life is optional. It’s voluntary. The key is knowing what your choices are up front.

Whether you are in Gen Z or a Baby Boomer, or in any generation in between, you have two options on how to save for your retirement.

Strategy A
Take a tax deduction on a small amount of your cash value today and anticipate that it grows into a bigger amount in the future knowing that the government could tax at any rate when necessary just to solve the inflation issue.

Strategy B
Pay tax at a small amount of your cash value today and put it in a place where the government could never touch it ever again. So when you get to retirement you can be in control of how much tax you actually pay.

Which strategy would benefit you and your family more? Strategy A or Strategy B?

It is our mission to help as many families as possible, make the best financial decisions that would benefit them. That’s why we present you with these strategies because we believe that it is more beneficial to pay a small amount of tax on the small amount of income, rather than deferring it into the unknown future.

If you are ready to learn how to utilize these strategies to work for you in your specific situations, schedule your free strategy session today

Remember it’s not how much money you make, it’s how much you keep that really matters.

Protect Your Dollars Against Inflation With Life Insurance

 

 
 

Currently we’re at 20.7 trillion of money in circulation. In 2025, it’s projected to be 33.5 trillion, and in 2029, it’s projected to be $53.9 trillion. Doesn’t that create inflation? What does that mean to us? Well, isn’t inflation really having an effect on the purchasing power of our money? Isn’t that literally a way that the government found to pay their bills by taking money from us, stealing our purchasing power?

Did you know that 40% of all US treasuries have been printed between the year, January, 2020 and today, not only that, but 78% of all the money that our government has ever printed has been printed between January 20, 20 and today. Do you have any idea what effect inflation is going to have on you, your family and your business? When it comes to responding to crisis, whether it’s wildfires, hurricanes, pandemics, or war, our government only has two ways that they’re able to respond. They could respond legislatively by increasing taxes, or they could respond administratively by printing more money. That’s it. They only have two tools in their toolbox when it comes to responding to crisis.

Federal taxes are projected to be $3.8 trillion for 2021. In 2020, 61% of us households paid no federal income tax and that number is expected to increase in 2021. Now in 2025 tax revenue is projected to be $6.3 trillion and in 2029, 8 years from today, tax revenue is projected to be $10.5 trillion. So we absolutely know that the government is planning on increasing taxes. Now here’s the question. When the government increased taxes, are they going to tax the people who don’t pay any taxes? Or are they going to tax the people who are used to paying taxes? Let’s face it. They can’t get blood out of a rock and when they go to increase the taxes by 270% over the next eight years, are you willing to pay those taxes? Are you prepared? What are you doing to protect yourself, to make sure you’re not paying more taxes than you need to? The point is we live in America and we have choices. Are you choosing a strategy that protects you from taxes? Or are you choosing a strategy that is going to subject you to increasing taxes?

So now we’re going to take a look at what happens when our government responds administratively by printing more money. Did you know that in the year, 2000, the amount of money in circulation measured by the M2 money supply was $4.8 trillion? In 2021, it’s projected to be $20.7 trillion. Now think about this: In the year 2000, it was 4.8 trillion, in 2021 it’s 20.7 trillion. The amount of money in circulation grew by over 430%. Well, our population in the year, 2000 was 300 million people. Today it’s 330 million. So the amount of people in our country grew by 10%, but the amount of money that they put in circulation grew by 430%.

The bigger problem is currently we’re at 20.7 trillion of money in circulation. In four years, in 2025, it’s projected to be 33.5 trillion, and in 2029, it’s projected to be $53.9 trillion. That’s a big number, but when the government prints more money, what does that create? Doesn’t that create inflation? What does that mean to us? Well, isn’t inflation really having an effect on the purchasing power of our money? Isn’t that literally a way that the government found to pay their bills by taking money from us, stealing our purchasing power?

How do you protect yourself against the effect of increased taxes and increased inflation? The stealth tax?

Well, that’s easy first and foremost, you want to protect your money. So you’re never subjected to losses. Secondly, you want to have access to your money so that you could take advantage of any errors, mistakes, or blunders that are made by the government, wall street and the banks. Lastly, you want to do both with reduced or eliminated taxes. What I just described are the benefits of cash value, life insurance.

If you’re looking to learn more about how cash value life insurance could help protect you, your family and your business against the eroding effects of taxes and inflation, schedule your free strategy session today!

How GameStop changed the way we think about the stock market.

 

 

“What if you could develop a strategy that would prevent you from ever losing money ever again, and because your money was safe, you were in a position to take advantage of any manipulations or volatility in the market.”

 

Have you ever felt that the market is being manipulated by wall street, the government and banks? Do you think it’s being manipulated for our benefit or for their benefits? Did you ever give thought to the fact that not one American CEO or senior executive did any jail time for the 2007, 2008 financial crisis that almost took down the entire financial system? That’s when they went begging to their buddies in Washington to get a bailout and you and I ended up paying for the bailout. How about this? We can’t benefit from insider trading, but they can. Congress set themselves up where they’re completely exempt from insider trading, but yet Martha Stewart went to jail for insider trading. 

We have to stop playing the game by their rules because the system is rigged against us. We need to play by a different set of rules to set ourselves up for financial success. We have the opportunity to take advantage of the markets rather than being a victim to the markets. Here’s another example of how the game is rigged against us. For years and years, hedge fund managers were able to short stocks and take advantage of the market. However, in the early months of 2021, when the general public began to manipulate the stock for Game Stop, the popular trading app Robinhood, took the stock off their platform so that no one else could take advantage. No one else could benefit from the market manipulation. 

Again, it’s another example of “we could manipulate the market”, meaning the insiders, but once the public gets a hold of it, “Oh no. Now what’s wrong.” Now the regulators are talking about stepping in to make sure that this could never happen again. Do you think the regulation is going to be for our benefit or for their benefit? 

Why play a game that’s set up for them to benefit and for you to lose? What if you could develop a strategy that would prevent you from ever losing money ever again, and because your money was safe, you were in a position to take advantage of any manipulations or volatility in the market. Furthermore, even better than that, what if you can do so with total elimination or reduced taxation on your money! Wouldn’t that be vital information to have? If that type of planning was available, when would you want to get started? 

 

How does inflation effect me?

“According to the Bureau of labor statistics, the average annual income in the year 2000 was $30,000. Today it’s only $34,000.”

 

Inflation is often referred to as the stealth tax. It’s stealthy because it’s kind of sneaky and no one really sees it coming. According to the federal government, over the last 20 years, we had a 2.5% inflation rate per year. Basically something that costs $1 in the year 2000 should now cost about a $1.51. We did some research and some things aren’t adding up. Let’s take a look at what we found. 

So in the year 2000, the average cost of a home was $119,000. Today, the average cost of a home is $320,000. In the year 2000, the average price of a new vehicle was $22,000. Today, the average cost of a new car is $38,000. In the year 2000, the cost of a year in college was $10,000. Today, the cost of a year in college is $41,000. Something doesn’t add up. 

So let’s take a look at how the government is calculating inflation. The government basically takes the price of a set number of goods. Over a period of time, it’s called the consumer price index or the CPI. Let’s take a look at it. In 1980, the government used 13 sectors of the economy to calculate inflation. In 1996, they reduce that to seven sectors of the economy. Then in 2008, they changed it to three sectors of the economy, but that’s not even the big problem. 

Let’s take a look at four sectors of the economy that aren’t currently being used to calculate inflation. First, healthcare. Second, taxes. Third, energy. Fourth, food. Now they’re including food, but now they’re saying you’re supplementing. So, if you were used to eating steak once a week, now they’re telling you that you’re substituting steak with hamburger. 

Now here’s the real issue. According to the Bureau of labor statistics, the average annual income in the year 2000 was $30,000. Today it’s only $34,000. That’s a 12% increase over 20 years. But if the government is correct about inflation and at being 51%, something still isn’t adding up. 

So in light of the fact that income has not gone up as much as the cost of living over the past 20 years, we think it just makes sense to protect your savings from the effects of taxes and to position yourselves to be able to take advantage of inflation in the future. 

 

 

How do I protect my money from inflation?

“As long as you keep your money in the whole life insurance policy, your money’s going to grow on a tax deferred basis.”

 

 

Inflation is a rise in prices of goods and services. Inflation reduces the purchasing power of our dollars. The problem is, the longer we hold onto our money, the less it can buy for us. Here’s an example. If you were to go into your backyard and dig a hole and bury $1,000 and leave it there for 10 years and after 10 years you go back and dig it up, what will you have? Well, it’ll be something that looks like a thousand dollars, but at 3% inflation over those 10 years, that $1,000 will actually only have the purchasing power of $744. The problem is not only will you have lost $256 of purchasing power, but you will have lost 10 years of time that you can never recapture. The government is destroying the purchasing power of our dollars every time they print money. Do you think our government will need more money in the future? If our government needs more money, there’s only two ways they can get that money. Number one is taxes. Number two is they can print more money.

There are six ways that whole life insurance can help protect your money against the effects of inflation. The first way is buying dollars for future delivery for pennies. Which means the premium you’re paying is pennies compared to the dollars you’re buying in a death benefit. What better way to protect your net worth than to buy discounted dollars for future delivery?

The second way is that your premium stays the same, but because of inflation over time, it’ll feel like less. For example, if you have a thousand-dollar premium at 3% inflation and 10 years, it’s only going to feel like $744. In this instance, you have inflation working for you rather than against you.

The third way that whole life insurance can help protect your money against the effects of inflation is what we refer to as multiple duty dollars. A lot of times clients will ask us, “Hey, I want to start saving, but I have to pay down my debt first.” We actually show them how to start saving today and how to pay their debt off quicker. How we do that is through whole life insurance. We take $1 that was just going to perform debt reduction and use it to reduce debt, to create an asset, to create a death benefit, to create a disability benefit, to create a long-term care benefit and provide retirement supplement. We took $1, that was previously doing one job, and got it to perform the job of 6 multiple duty dollars.

The fourth way whole life insurance can protect against inflation is dividends. Although dividends aren’t guaranteed, dividends typically increase as the policy matures. That’s an addition to the guaranteed growth within the policy. As interest rates rise in the market, the dividends in the policy typically increase. All other safe money products, as interest rates rise, the value of the product decreases because of the inverse relationship between interest rates and price.

The fifth way that whole life insurance can protect your money against inflation is through collateralization.  The loan feature, your loan against a life insurance policy, is actually a collateralized loan against your cash value. So literally your money could be in two places at once because you’re borrowing against your cash value and getting a separate loan from the insurance company. Our clients have found that this can help them to take advantage of tremendous opportunities that are created when the market crashes because they can borrow against their cash value. When the market is down, they can buy into the market and then sell when the market rises. They can then put the money back into their policy and then use the money the profits gained from that transaction to supplement their income or to buy another policy. Our clients have found this to be a tremendous tool to show them how to take advantage of downturns in the market rather than become victims of market volatility.

The sixth way that whole life insurance can help protect against inflation is taxes. As long as you keep your money in the whole life insurance policy, your money’s going to grow on a tax deferred basis. Additionally, you’re able to access your cash on a tax-favored basis. This is a huge advantage over other financial products.

In summary, life insurance can help protect your money against inflation by reducing or eliminating taxation. It also makes your money more efficient, think multiple duty dollars. Thus putting you in a position to take advantage of market volatility, rather than becoming a victim of market volatility.

 

 

What are the benefits of whole life insurance?

What are the benefits of whole life insurance? In this video, we explain whole life insurance benefits and why they are essential in any diversified portfolio. A benefit of whole life insurance is that your money is continuously being compounded. There are three known factors that could interrupt compound interest, using your money, taxes, and market losses. We break these down for you and explain why whole life insurance takes them out of the equation. Another added benefit is that whole life insurance also protects you against inflation. When you own a whole life insurance policy, you’re allowing yourself to take risks in other investments!

“To call whole life insurance an investment is actually demeaning to whole life insurance.”

 

 

Have you ever wondered what the benefits of whole life insurance are? The number one reason why whole life insurance should be a part of your portfolio is because of efficiency. When we’re talking about efficiency, in this case, we’re talking about the fact that your money is continuously compounding in a whole life insurance policy. There are three things that could really interrupt the compounding of interest on your money.

The first, is using your money, then taxes and then market losses. So how does using your money interrupt compounding? Well basically you save and then you use the money to buy a car, or to make a down payment on a house, or to pay for a vacation or to pay for college, and then once you access that money, it’s no longer available for compounding. In contrast, when you take a loan against your life insurance policy, you’re able to continuously compound because you’re taking a loan against the cash value. You’re not taking the money from your life insurance policy.

The second factor that could interrupt compounding on your money are taxes. When you think about it, with traditional savings and investment accounts, you get a 1099 or a dividend statement and with mutual funds you could actually get a 1099 or a capital gain statement in a year when you lost money. Overall, it’s sort of like adding insult to injury and a lot of people don’t even realize how inefficient this really is because they’re paying their taxes from their lifestyle. They’re not taking money from their investments or savings, so they never have an opportunity to see the eroding effect that taxes are having on their investments and savings. The bottom line is, you cannot accumulate wealth in a taxable environment.

The third factor that can interrupt compound interest are, market losses. When you lose money in the market, you take a step backwards and need to restart the compound interest process. Again, with whole life insurance, you have contractual growth, which means that the growth is guaranteed by contract in the policy. On top of that, you have the ability to earn dividends and once dividends are paid, that could never be taken away. In conclusion, whole life insurance is efficient because it takes the three factors that could interrupt compound interest out of the equation.

The next benefit of owning whole life insurance is protection against inflation. Inflation is known as the stealth tax. You experience it but you never actually see it and what better way to protect yourself against the stealth tax than to purchase dollars in the future with pennies today. Use those pennies, the cash value in the life insurance, to purchase additional income producing assets. Life insurance is known as an asset because you’re able to maintain the death benefit, but also access the cash value along the way to purchase other investments and assets. When you get to retirement, you can use those additional assets to supplement your income and finally, you can leverage the death benefit in retirement to generate some additional passive tax-free income. Whole life insurance is a way to truly diversify your portfolio. True diversification is putting money you don’t want to lose in a place that you could never lose.

In conclusion, whole life insurance compliments your other assets. By owning a whole life insurance policy, you’re allowed to take risk in other investments, but understand life insurance is not an investment. To call whole life insurance an investment is actually demeaning to whole life insurance. This is because whole life insurance can do so much more than an investment.

How to navigate the current economic downturn.

 

Were you prepared for an economic downturn? Given the current situation, many people were not financially prepared for the effects of Covid-19. Whether you’ve been laid off or are now working from home, most people are struggling financially. You may have a few options when it comes to accessing some of your invested money. You can take money out of your retirement plan, you could sell your shares in the market, you could get a 401K loan, or you can access some of your home equity. This video will go over all of the implications these options have and what you could do to prepare for future economic downturns.

 

“I’ve been in the financial services business since 1985 and this is actually the fifth market correction that I’ve been through and I’ve learned a few things that have helped my clients to weather the storm.”

 

Today we’re in the midst of the covid-19 pandemic. Because of the pandemic, there are a lot of financial and economic uncertainty in the world and today we’re going to talk about how you could possibly position yourself to take advantage of this financial opportunity and come out better on the other end.

First, we’re going to discuss what you may be experiencing out there in your economic world.If you’re an employee, you may have been laid off or working from home during the pandemic. Either way, these changes cause stress and whether or not you’re still earning income, your bills are still accumulating and if you’re a business owner, your overhead continues. Plus, you have the added stress of knowing that the livelihood of your employees and their families are in your hands. So, at this point, most people, whether you own a business or whether you’re an employee, you’re stressed out trying to think about where you can raise some money to get through this financial crisis,
which brings us to our next point. Where do you have money stored that you could have access to it during this tough financial time?

Let’s face it, most people had money invested in the market and for 11 years that was the place to be and it worked until it didn’t. Well, now the market’s down quite a bit and with your income being reduced, you’re scrambling to get access to capital. Now may not be the best time to be selling your investments in order to pay for your current lifestyle.

Another place you may have access to money is in your retirement plan and for some people this may be your only option. There are a few things to consider if you plan on taking money from your retirement plan. First, if you’re 59 and a half, you’ll have to consider the penalty that will be applied to your distribution. Everyone will have to consider the taxable income from the distribution and most people at this point will have to consider the losses that were hit on their account.

You may not want to be selling at this point, but if that’s the only place you can get access to money, that may be the only option. You also may have options in a 401k, where you can get a 401k loan. But again, there are things you need to consider. Number one, the amount of the loan is limited and number two, the loan has to be repaid usually within a five-year period. In essence what you’re doing is obligating your future income.

This could become a problem, especially if your job is eliminated. Any outstanding loan balance would be taxable fully as income at that point. Also, if you’re under 59 and a half, you’d have to consider the penalty that would be applied. Another place you may have access to your capital is in your home equity, whether you were paying your minimum mortgage payment or paying extra on your mortgage. People have money stored in the equity of their home and they feel that it’s their money. They can get whenever they want, but the reality is the bank will only give you permission if you qualify for being able to repay that loan. The fact of the matter is during these uncertain financial times, the bank may not be readily willing to allow you access to your home equity. I remember a quote from the syndicated radio show host, Paul Harvey, and he said, “it’s times like these that remind us that there have always been times like these.” The point that I got out of it is, the fact that if you were prepared for these times, you wouldn’t have to be scrambling and looking at accessing money from places that may be have restrictions as far as accessing it.

I’ve been in the financial services business since 1985 and this is actually the fifth market correction that I’ve been through and I’ve learned a few things that have helped my clients to weather the storm. First and foremost is the importance of having access to liquid cash when these scary financial times occur. The importance of having liquid cash, cash that isn’t tied to the stock market, or money that isn’t tied to the economy tap, cash that isn’t going to leave you with a tax bill. Cash that you could access at any time with no questions asked.

What we’re talking about is cash value, life insurance. Ladies and gentlemen, this isn’t new. This has been around for over 200 years. In fact, JC penny used cash value life insurance. He literally borrowed against his life insurance policies to weather the storm created by the great depression. He had 1400 stores, that’s 1400 stores full of employees that he was responsible for the well being of them and their family. He borrowed against his life insurance to weather the storm. Our point is that if you’re properly positioned, you can utilize and access the cash in your life insurance policy to help you weather Covid-19 and actually take advantage of the opportunities that are going to be created by this pandemic and created by this financial uncertainty.

Keep in mind, life insurance companies are specifically designed for times like these. They’re the most well capitalized businesses in the world. They’ve been through this before. They have a 200-year track record. They know what they’re doing during these scary financial times.

If you have a cash value life insurance and aren’t sure how to use it, please give us a call. We’d be happy to be of service. If you need help designing a policy to help you get through the next financial crisis, give us a call. We could help you design one that helps meet your needs.