As I was talking with a prospective client the other day, we’ll call him George, George said “I only need a couple more years at 12% and then I’ll be retired and life will be good.”  He’s a small business owner, and a successful one at that so it really surprised me to hear this come out of his mouth.  It has bothered me ever since.  So often we forget what the past has taught us.  In just the past 15 years we have had two major adjustments in the stock market.  All of the pundits are at a loss for an explanation for the stellar performance of the market and many are expecting a major correction once again.  (Don't take my word for it see what Forbes says, click here.)  Yahoo Finance also states, that the real estate market is bad, and could get even worse, gold has stalled out, and yet George is still expecting 12% for a  few more years.  When I asked what he was basing this expectation on, he couldn’t really say, just that he’d been able to get that the last few years.  Yes, he also lost 28% in 2008. 

Eleanor Rosevelt said “Learn from other’s mistakes.  You can’t live long enough to make them all yourself.”  But as John Dewey stated “We do not learn from experience… we learn from reflecting on experience.”  If we take a moment to reflect on what George’s experience has been and the mistakes he has made, and is currently making, perhaps we can learn from him, rather than having to make those same mistakes ourselves.  I see 3 quick lessons we can learn from George.  

 Lesson #2- Warren Buffet’s number one rule of investing is “NEVER LOSE MONEY”.  The reason behind this rule of one of the most successful investors of our time is two-fold.  First, losses require significant returns to recover.  In George’s case, though he has earned roughly 12% on his investment each of the last  3 years, he needs a 39% return just to break even and recover from his losses.  If we throw this out in a mathematical equation that shows us the effects of compound interest included we see reality(we’ll simplify it a bit and just use $100,000 and show the loss year immediately followed by 3 years of 12% returns):

So we can see that even with great returns of 12% annually for 3 consecutive years, George has just barely recovered from his real-life losses.  While doing so, George also lost 4 years of potential earnings while getting 4 years closer to retirement.  This illustrates clearly why Mr. Buffet feels so strongly about avoiding losses.  If we were to take, instead, a conservative 5% rate of return with guaranteed protection from loss instead of a risky approach chasing the 12% rate of return, he would instead have  $115,762, as you can see in the example below:  

   That’s a difference of more than $14,000 in a very short time, in a very conservative approach, just by avoiding loss (the Wharton School of Business ran this concept, called indexing, over an extended period of time and found that historically it is a very viable approach, not just for those close to retirement, but for all those who are saving for retirement).  Besides, if it’s good enough for Warren Buffet, it’s probably good enough for me.

Lesson #3- Taking time to reflect on life, in all areas, is essential to improvement and true happiness.  Money isn’t everything, but it can teach us a great deal in life, if we let it.  As Mr. Dewey pointed out, learning comes from reflection.  In George’s case, running a small business has occupied his mental energy for so long that it is now getting in the way of him taking a reflective and crisp approach to his retirement planning.  What are you allowing to sap the mental energy you should be putting towards those important things in your life?  George is a great man and is doing his best to juggle his various priorities.  We all have to do the same, but often times we find ourselves dedicating time to Facebook, Youtube, and Netflix rather than reflecting on our relationships, work, plans, dreams, and wonderful blessings we each enjoy in our lives.

About this Author: Ed Kinsey has been in the financial services industry since 2003. He has experience in Real Estate, Mortgages, Commercial Finance, Annuities, and Life and Health Insurance.  His goal is to benefit the lives of one million people. He want companies to start providing better benefits at lower costs through our services. He wants to enlighten people to the retirement benefits available through life insurance, the only tax free retirement option. We have secure solutions.  Ed is also a world ranked powerlifter and fitness enthusiast.

Wow!  I feel smart today!  Every once in a while life hands you a great big “everything is awesome” piece of news.  That happened for me this morning while reading in Morningstar.  Currently there is some buzz between the two camps in retirement planning.  The big question: “is there a crisis in retirement planning?”  The good news, for me anyway, is that in my corner I have a Nobel prize winner.  We both agree that there is a retirement planning crisis. 

Misunderstanding- It used to be that we as American’s would work for the same company for the bulk of our career, put in our contributions toward a pension, and we’d know what our income would be at retirement.  Pensions are dead, as we all know, and now most of us deal with the 401k offering.  Because we are, for the most part, uneducated investors, part-timers at best in the investment world, we aren’t prepared and qualified to manage our own accounts.  In Merton’s words “putting relatively complex investment decisions in the hands of individuals with little or no financial expertise is problematic… the seeds of an investment crisis have been sown.”  With pensions, we were able to expect a portion of our salary for life.  That made sense.  Now we’re hoping to amass a large sum of money and when we’re on track to retire with $600,000 in a retirement account we feel accomplished.  In reality, however, that $600,000 IRA will only provide income of $18,000 a year for a couple in good health.  $18,000 per year in retirement isn’t the dream retirement most of us would expect from an account worth more than a half million dollars.  But, once we figure in longer life spans(thanks modern medicine), market volatility, and inflation, we can start to see how the nice IRA  could be less than adequate for our needs.  Instead, we should plan based on an anticipated income need/desire and eliminate as much risk as we can since we are relatively unprepared to navigate said risk.

Laziness- We live in an “at arm’s reach” society where we have anything we could ever want right at our fingertips.  We have restaurants to eat whatever we want, we have phones where the 4th most important thing they do is make a phone call, we can watch any sort of entertainment anywhere, anytime, and all in HD.  Because of this, our ability to wait and plan has great diminished.  We are vastly more susceptible to the enticements of those shiny things in life than we are to the dull, boring time tested principles that have been proven to work.  We have become a fairly lazy society and this applies to our finances as well.  Our personal savings rate is near all-time lows and our debt is as high as it has ever been.  We’ve become undisciplined and lazy with our personal finances and have instead traded in time tested principles for boats, mortgages and flat screen high-def 60 inch tv’s.  

Procrastination- If, by chance we’re one of the few who hasn’t been bitten by the lazy bug, we still tend to argue with ourselves, saying “I’ll start saving next year” or “I just need to finish paying off this car” or “I can’t afford to save right now”.   The truth is still the sooner you start saving for a retirement, the less you’ll have to put away.  Interest earned over time compounds your effort and discipline, but so many of us put it off for one excuse or another.  If we don’t understand and utilize the compounding interest concept, we are creating our own retirement crisis.

The best way to overcome  your own personal retirement crisis is to start today, be disciplined enough to regularly save, and contribute to a plan that has minimal risk, is built around building a specific retirement income, and that works on autopilot.  This is seldom found within the 401k.  

The most common retirement options available to employees are through 401k's.  While these certainly have their place, many are not aware of alternatives that have significant advantages over the 401k.  For example, if an individual has a 401k option through their employer that matches up to 4%, but wishes to contribute more, let's say 10%, they should be aware of some options that will likely yield better returns in the long run and protect their money better as well. 

They can simply contribute the 4% that the employer will match, and take the other 6% and contribute that to a retirement vehicle that will protect the investment from any losses, and allow them to take the money TAX-FREE when they need it in retirement.  A 401k is a tax-deferred retirement vehicle, but if you are of the belief like I am that taxes are VERY LIKELY to increase in the future, the end result will be paying more taxes in the future than you would in the present.

This may seem a bit confusing, but a trusted advisor can help you to make sense of it all.  For now, suffice it to say that there are excellent alternatives to the 401k that protect your money better, allow for excellent growth potential, and have great tax advantages. If you would like to learn more.  Call 1-855-876-5252 if you are interested in learning more.

About the Author: Marc Roethel has over 7 years experience in the life and health insurance and retirement planning industries.  He is CEO and co-founder of the LIFE1010™ program, which is designed to help individuals through a step-by-step process of getting their lives and businesses in order.  The program focuses on emergency preparedness, creating an effective spending plan, health and wellness, and retirement planning.  He is also co-author of the book "Not Yo Mama's Retirement Plan", which takes a fun and easy to understand approach to a risk-free and tax-free solution to retirement that is proven and mostly unknown by the majority of the population.

“The proverbial pot of gold at the end of the rainbow is missing!  The financial world is in a mess!  It doesn’t make any sense.  Where is that d@mn leprechaun with my money!”

This is a direct quote from a new client I met with last week.  There were St Patty’s day decorations on the sliding glass door there in the kitchen and we joked about Irish booz (I don’t drink..never have) being the best part of  the “green holiday”.  Of course, I was there looking at their financial plan, and frankly, they weren’t in too bad of shape.  That didn’t mean Mike was happy though.  Too much in spending and debt (a nice little credit card he didn’t know about really made him happy.  Marriage is funny that way) and too big of a mess of the budget and what goes where and no real plan.  Mike was agitated!  Something not all that uncommon now-a-days. 

Mike is looking at being unemployed by the end of the year.  The shop where he works is going under and he’s trying to figure out how to get from here to retirement.  He’s a saver but Shelli isn’t, and he took a pretty good hit back in 2008 so he’s just now back to where he was then.  He’s not sure where to invest because he’s been reading http://www.cnbc.com/id/101418280  and he doesn’t have time to watch the market 24/7.

“Where’s the magical pot everyone talks about.  I’ve tried to be good and save, though we haven’t been perfect.  We’ve saved a lot.  I’ve been employed consistently until now, I’ve made some decent real estate investments (though, to be honest, they’ve used these gains to pay off debt or buy a toy or two more often than not) followed the buy and hold strategy, but then I read the other day about sequence of gains risk and the real effects of loss and all of a sudden I’m not so convinced that traditional planning works.”

Mike was citing  Ric Dalberri, founder of Retirement USA  and there are dozens of others out there who cite this statistic as well.  I’m not sure who the real source is, but if you look through all the statistics, it’s very apparent that the system is broken.  If you’re doing nothing about it, you’ll end up like 95 out of every 100 Americans who won’t have what they need at retirement.  Of course, there is always Social Security (we hope!) but actuarially speaking that won’t last another 20 years. 

The good news for Mike, and for you and me, is that there are things we can do to secure our pot of gold.  We don’t have to stay uneducated about what loss really does to us and our true returns, we don’t have to just act like we know what sequence of return risk means, we don’t have to put our faith in the greed of Wall Street.  We can take control and create a secure retirement.  We can learn things like how to pay our mortgage off in 2/3 the normal time with virtually no change to our budgets and spending habits, we can learn how to suck 2 times as much out of our retirement while protecting those funds from the fluctuations in the market, we can learn how to outdo Obamacare by building our own health insurance fortress (and save some money at the same time).   For Mike and Shelli, we’ve put them on the path to retirement freedom.  We’ve found that pot and it’s getting filled with gold as we speak.  They’ll be alright.  Now it’s your turn! 

Fill out the form below or call 1-855-876-5252 if you are interested in learning more.

There are many types of trusts, but I want to speak to one particular type of trust.  That of the REVOCABLE LIVING TRUST.  There are some people that disagree with me on this, but I feel like this particular instrument is one of necessity in your plan.  It should be a goal of each of ours to get to a place where we can have a trust implemented.  This is assuming you have enough in assets to want to pass something on to beneficiaries.  Things like real estate, bank accounts, investment accounts, and the like.

But I don’t have enough money for a trust- this is the first of the excuses I hear when I recommend a trust.  To be frank, those with lower amounts of money (who knows what that means) need to have a trust simply because they’re not going to have the money to come up with court costs, probate fees, lawyer fees and the like.  Granted, you can have things like you IRA’s and life insurance properly designated to beneficiaries, but what about real estate, savings accounts and brokerage accounts.  Amongst all the costs that could be incurred, a $500-$1500 charge to get a trust in place is a small investment.

What a trust “buys” you- a trust allows you to bypass probate first off.  Probate is the headache and costly process of putting your property, upon death, up for grabs to any supposed creditors.  Trusts provide a nice safety net that way.  Guardianship is another concern.  Assets that have trusts as beneficiaries allow minors to not have to wait for a court to set up guardianship before the life insurance pays out.  Or if the beneficiary dies along with you, like in a car crash for example, the proceeds go to the estate and then have to work through the probate process.  Guardianship fees can cost $1000’s.  Incapacity is one other area where trusts are very helpful.  Trusts allow you a very robust platform for you to dictate what happens in the event you are incapacitated. 

Wills vs. Trusts- Typically we recommend considering a will along with the trust, but so you can distinguish between the two…  A will is public, through the probate process; a revocable living trust is generally private.  Wills don’t define an estate, they only dictate where assets should go if no other creditors lay claim to them first.  Wills instruct how to pay the taxes and debts, which should manage property, name guardians for children, etc.  So in short, you should consider having both a will and a trust.

In summary, a well-drafted trust, by a competent attorney, is an extremely valuable asset that can save you and your beneficiaries in both money and headache.  

About this Author: Ed Kinsey has been in the financial services industry since 2003. He has experience in Real Estate, Mortgages, Commercial Finance, Annuities, and Life and Health Insurance.  His goal is to benefit the lives of one million people. He want companies to start providing better benefits at lower costs through our services. He wants to enlighten people to the retirement benefits available through life insurance, the only tax free retirement option. We have secure solutions.  Ed is also a world ranked powerlifter and fitness enthusiast.

Valentines day is just around the corner, and with most marriages ending due to financial stress, why not give something that could help save a marriage instead of chocolate.  :)  

In our country today, there isn’t a lot of hope or promise on your current 401k retirement plan. In the book, Not Yo’ Mama’s Retirement Plan, you will learn about the other options out there that will better secure your retirement plan. Answer all the questions you might have about investing, retirement & life insurance. What is an IUL and what can it do for my family? Is the market risky? Is my 401k going to financially secure me when I retire? Get the answers to all these questions and more today!

Better yet, use this discount code to get 20% off your entire order!  
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