protect against inflation

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 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.