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If You Are Counting On A Government Pension, What Happened in Rhode Island Should Make You A Little Nervous







By Teresa Kuhn, JD, RFC

A few days ago, a news blurb, tucked away on the digital site of the Los Angeles Times caught my attention:

“Federal Judges Dismiss Unions’ Appeal Over Pension Overhaul”

The article was a mere blip on the news radar- a seemingly mundane Federal courts appeal decision that upheld pension reforms in Cranston, Rhode Island; a town formerly known as Pawtuxet, with a population of about 80,000.

Firefighter and police unions filed the appeal, saying that governments don’t have the right to change the terms of public employee contracts, even when those governments are experiencing severe financial distress.  In other words, unions maintained that pensions are sacred and untouchable and that government entities cannot reduce them or change the terms, even if such a reduction would prevent bankruptcy.

The court disagreed, however, and upheld governments’ rights to modify contracts based on some essential tenets of contract law.  I won’t bore you with the specifics, but if you are interested you can read it here:

The point of this is simply that Cranston’s appeal is establishing a precedent for other cash-poor municipalities, counties, and states to use as they seek to reduce or even eliminate pension pay-outs.

This scenario is playing out again and again, as cities, trying to achieve some measure of fiscal responsibility, try to trim the largest item on their bloated budgets: so-called “unfunded liabilities”, the lions share of which involves government employee pensions.

In California, for example, a meltdown of epic proportions is on the horizon.  In 2015, Pew Charitable Trust reported that the state’s two largest pension funds gathered just 79% of the nearly $18.9 billion they needed to keep their pension debts from increasing.

Since that time, things have continued to worsen with some government entities’ funding levels dropping as low as 64%!  Adding to this is an increasing number of state appellate court decisions challenging the so-called “California Rule.”  The California Rule has long been interpreted to prohibit any changes to public pension benefits and has served as a model for other states as well.  But with more and more cities in the red, challenges to the California Rule and to the idea that pensions are untouchable are increasing.  The math has finally caught up to free-spending politicians who are being forced to enact pension reform , whether they want to or not.

What does this mean for YOU?

Pension woes aren’t exclusive to California and New York, but have also had an impact in Michigan, Kentucky, Alabama, Pennsylvania, Rhode Island, and Idaho.  According to the website, there have been 61 municipal bankruptcy filings in the US since 2010.

(see )

Many other states and localities are in poor financial health, and the only way they can turn it around is to slash city services and/or trim pension costs.  This means, that although it’s great if you have a government pension, you MUST build up your Plan B in case that pension experiences changes which could severely impact your retirement plans.

At Living Wealthy Financial, we believe that pro-actively managing your wealth is the only way to ensure that your life after work will be less stressful and more fulfilling.  We build our clients’ financial future on a solid foundation, taking into account their unique situations and incorporating the power of specially structured cash value whole life insurance.  We’d love to talk to you about how we can help you create the financial future of which you’ve always dreamed.  Call us today for your initial consultation at (800)382-0830.

Want to Retire by Age 40? Here’s What You Need to Consider.

By: Teresa Kuhn, JD, RFC

The genesis of the modern movement to retire by 40 was Jacob Lund Fisker’s 2007 book, Early Extreme Retirement”(ERE).  Fisker, who retired from his profession at the age of 33, theorized that nearly any individual could retire long before age 65 by following a few simple steps.  His book laid out a blueprint and principles for attaining financial independence in just 5-10 years.

The principles advocated by Fisker, including avoiding debt, acquiring passive sources of income such as real estate, and saving as much money as possible are certainly sound and worthwhile strategies. However, as enticing as the premise of early retirement may be, there are some serious limitations that you must look into before taking this path yourself.  When designing your early retirement blueprint it is critical that your financial strategist does not use traditional retirement modeling and that he or she factors in the potential problems of retiring before 65.  In other words, the math that your mother and father used to retire at 65 won’t work for you.

You’ll Rely More on the Whims of the Stock Market

If you’re considering retiring early then you’ll probably be forced into the stock market, whether or not you want to be there.

According to American Funds, longer time horizons will create a greater reliance on stock market returns.  The traditional “4% withdrawal rule”, based on a 30-year retirement, is invalidated when adding an additional 20-30 years of retirement to support.  Given the history of ups and downs in the American Stock Market, failure to account for poor returns early in your retirement could spell disaster later.

Many Happy Returns in the Future?

Traditional retirement math must be reworked to contemplate the potential for lackluster returns in the future and lowered rates of economic growth.  Since a person on a longer retirement plan is so reliant on investment returns, and a new normal of less than 4% withdrawal rates could wreck their plans, your financial advisor must anticipate this when designing an early retirement blueprint.  Past performance, as you know, is not necessarily a good barometer for predicting the future when it comes to the market.  You’ll need more money to overcome market downturns.

The Longer You Are Retired the More Risks You Face

Contrarian financial website, ZeroHedge uses a grimly humorous tagline: “On a long enough timeline, the survival rate for everyone drops to zero.”

 I’ve reworked this a bit… “On a long enough timeline, there’s a 99.9% chance that you will face unexpected risks and spending shocks.”

Think about it.  If you leave your job at age 40, you could live 40, 50, or even 60 years in retirement.  During that time, you will almost certainly face small and large financial shocks that could bust your budget in a big way.

A recent actuarial study reported that over 38% of age 65 and over retirees experience a spending shock of 25% or more during retirement.  Unanticipated expenses such as health crises, natural disasters, home and automobile repairs, and other unpleasant surprises are major causes of retirement plan implosions.  This risk is magnified on a longer timeline.  If you plan on retiring early, be sure to factor in an additional 20% or more to account for these potential risks.

Do You Really Want To Live This Way?

The average American needs at least 20 years or more to accumulate a significant amount of retirement money.  In order to take off a third of that time, you’ll need to maximize your savings percentage as much as possible.  Doing so will require making lifestyle sacrifices with which you may be uncomfortable.

I am always for getting rid of debt and unnecessary expenses, but if you want to retire in 7 years, you will have to save nearly 75% of your income!  To do so, you’ll have to cut back on every single expense and be so frugal that your present life becomes unenjoyable.  For example, Fisker’s book recommends getting rid of your air conditioning to save money.  Those of us who live in hotter regions would likely have a tough time doing that.

Bottom Line

Even if you love your job, you probably don’t want to work until you die.  But, you don’t want to make your present life miserable trying to retire too early, either.  Luckily, there is another way that I would love to show you that allows you to avoid Wall Street and banks, save on taxes, and which gives you the possibility of retiring before you ever imagined.  Call our office today at (800)382-0830 and I will be glad to send you free educational materials that will help you learn how to take charge of your financial future and create a healthier, more fulfilling life.

What a 40 year old needs to invest with 95% confidence

Annual spending and withdrawal rates  

Will You REALLY Be Able To Retire?

By Teresa Kuhn, JD, RFC

According to a 2015 report by the United States General Accounting Office (GAO), over half of all Americans had nothing saved for retirement.  By this I mean literally NOTHING; no pensions, no 401(k)’s, no permanent life insurance, no jars full of silver quarters.

Worse still, at least in my opinion, is that the few Americans who have scrimped and saved and put away money have, on average, accounts worth only about $104,000.  To put this in perspective: that $104,000 nest egg, even with prudent investment, will only yield around $300 per month at retirement.  Often times I find people with these plans are deceived into thinking that the monthly payments will magically grow and be enough to ensure a good retirement.  That just isn’t possible.

It’s no surprise to me that financial news media reports indicate nearly 70% of Americans will not be able to retire comfortably.  At least they won’t be retiring to lives like those pictured on the glossy brochures of conventional retirement vehicles.

The marketing departments of big retirement planning companies continue to push the idea of retirement as lazy, warm days on the beach, walking hand-in-hand as the sun sets, going water skiing, playing golf, enjoying life to it’s fullest.

Americans have no trouble buying into the fantasy of a comfortable, enjoyable post-work life.  After all, many of us have looked on with envy as our Greatest Generation and Baby Boomer parents and grandparents have been able to enjoy exactly what the brochures promised.

The sobering truth about retirement in the 21st Century, however, is that more of us may be living in poverty than enjoying a comfortable, satisfying life.  Many will find themselves in the unfortunate position of needing public assistance, or having to borrow money from friends and family.  That dream house may actually be a run-down apartment in the worst part of town, a room in a relative’s house, or even a shelter.

So, why is this happening in the United States and what, if anything can be done to alleviate the problems faced by those facing retirement?

Debt Is Not The Only Player – Life Has Gotten More Expensive

Debt is always a concern, particularly as a person nears retirement.  And, it is definitely a wise idea to make debt elimination a priority.  However, debt isn’t as much of a factor in Americans’ inability to save as you might think.  Much more relevant is the fact that most of us have little to nothing left after we pay our bills. For example, the cost of food has gone up nearly 5% in just the last year with some staple items rising even more.  Facing such increases and the fact that wages are stagnant, many people find they spend every dime just to survive.

Elimination Of Traditional Pensions and Post-Retirement Benefits

Days before completion of it’s $150 billion merger with Dow Chemical, corporate giant DuPont offered 9,500 vested employees under the age of 62 lump sum payments in an attempt to decrease it’s looming pension gap.  The offer allows employees who aren’t old enough to start collecting their pensions (usually age 62.5) the chance to get a one-time payout.

Sounds great, doesn’t it?  I mean, after all, a bird in the hand is always worth 2 in the bush, right?  For most of those who opt for this lump sum, the results will probably not be so positive.  Some pension experts say that in cases where employees settle for lump-sum payouts, nearly one third of them will have spent the money BEFORE reaching retirement age.

Last year, DuPont announced that in 2018, it will no longer contribute to active employees’ pension plans, a move that saves money but puts over 13,000 employees’ retirements in jeopardy.  Additionally, DuPont will cease to provide medical insurance for many of its’ retirees.

DuPont’s actions are the new normal as large corporations seek new ways to bolster sagging profits and eliminate debt.  More and more companies will replace their pension plans entirely with 401(k)’s, which, as I have written about before, are nowhere close to living up to the hype of the companies that sell them.

Increased Health Care Costs For Retirees

Not only are old school pensions becoming rarer and rarer, but post-retirement medical benefits are also on the wane.  This means seniors, even those on Medicare, are footing more of the costs of keeping themselves healthy.

Even with good medical care and a healthy lifestyle, 50% of all Americans will spend at least some time in a nursing home.  According to Genworth, one of the country’s largest producers of Long Term Care Insurance, only 5% of Americans have long term care policies in place.

The average nursing home stay is just over 892 days (2.5 years) while Medicare only covers about 100 days of nursing home stays.  With nursing home costs running anywhere from $4,000-$9,000 per month, it’s easy to see how a family’s entire savings could be wiped out.

401(k)’s and Other Retirement Schemes Aren’t Working As Planned

According to journalist Timothy Martin in his January, 2017 article in the New York Times, early architects of what are now called “401(k)” plans are having a lot of second thoughts.  Writes Martin:

“Many early backers of the 401(k) now say they have regrets about how their creation turned out despite its emergence as the dominant way most Americans save.  Some say it wasn’t designed to be a primary retirement tool and acknowledge they used forecasts that were too optimistic to sell the plan in its early days.

Others say the proliferation of 401(k) plans has exposed workers to big drops in the stock market and high fees from Wall Street money managers while making it easier for companies to shed guaranteed retiree payouts.”

While not everything is wrong with 401(k)’s, there are enough problems to warrant caution on over-reliance on them as a primary retirement vehicle, especially since there are no hard caps on the management fees that can eat into your retirement money.

Can Bank On Yourself® Help Make Retirement Possible?

The good news in all of this is that by partnering with a highly trained Bank on Yourself® Authorized Advisor, you can create a more streamlined, tax-advantaged method of growing your wealth safely and sanely without exposing it to unnecessary risk.  A Bank on Yourself® Authorized Advisor will look at your current retirement plan, help you find money you didn’t know you had, and show you realistic ways to create a stream of income that you won’t outlive.

Even if you currently have a trusted financial planner, partnering with a Bank on Yourself® Authorized Advisor ensures that you have every base covered and have created a sound blueprint for the future that allows you use, liquidity, and control of your own money.

Call us today at 1-800-382-0830 for a no-cost consultation or to request our free information packet.

Three Reasons Why the Social Security of the Future Won’t Look Anything like the Social Security of Today

By Teresa Kuhn, JD, RFC

It’s no secret that Social Security is in big trouble and has been for a number of years. While many Americans profess at least a cursory understanding of the problems facing Social Security, an overwhelming majority of us are counting on it to contribute some, if not the majority, of our retirement income.

Concerns about the solvency of Social Security appear to be well-founded. Even the government, as indicated in reports generated by the Congressional Budget Office, acknowledges that the program is strained to the max and will reach a tipping point in the near future, perhaps as early as 2028.

Social Security’s woes can be traced to three primary issues. Unless and until these issues are addressed, it is highly likely that your Social Security plan will resemble that of your parents and grandparents in name only.

Everyone is rushing to the exits at once

The first challenge to Social Security is perhaps the most difficult to resolve. Hundreds of thousands of baby boomers are leaving the workforce and heading into retirement all at once. This mass exodus means there is a difficult to absorb and very rapid expansion of the eligible beneficiary base. Social Security, conceived more than 80 years ago, did not envision such a dramatic demographic shift. As a result, the architects of the system did not account for it when structuring the plan.

Long gone the pensions

A second factor, perhaps less obvious to many of us, is the erosion of defined benefits plans. Also known as pensions, these plans have traditionally provided workers with guaranteed lifetime annuities that begin at retirement.

Defined benefits programs promise employees specific benefits usually based on years of service and earnings received near the end of an employee’s career. Most pensions in the private sector have been replaced by defined contribution plans in which a certain amount of money is set aside each year by a company for the benefit of its’ employees.

According to Investopedia, defined-contribution plans accounted for $6.7 trillion of the $24 trillion in total retirement plan assets held in the United States as of Dec. 31, 2015.

Defined contribution plans, whose fortunes are strongly tied to the stock market, are the opposite of defined benefits plans in that there is no way to know exactly how much a participant will received at retirement. Volatility of the market means that for great numbers of plan participants, Social Security will be needed to make up the gap.

Extended lifetimes guarantee problems

Another issue sure to impact Social Security’s long term viability is increased American life expectancy. Technology, greater awareness of diet, nutrition, and exercise, and better medicine means even the poorest Americans are living longer lives.

When the Social Security Act was passed in 1935, the average American life expectancy was around 61.7 years. However, life expectancy has increased so rapidly that the World Health Organization predicts American women will live an average 83.3 years old and men will live to be 79.5 years by the year 2030!

You don’t have to be a math whiz to figure out that having so many people on benefits for such a long time is bound to strain the system to its’ implosion point. The Social Security Board of Trustees has indicated its’ belief that the program’s $2.8 trillion in surplus cash could be exhausted by 2034. At that point, beneficiaries could see reductions of up to 21%!

This is bad news for those who are counting on this money to fund their retirements.

Author and asset protection specialist, Mark Nestmann, also paints a sobering picture of Social Security’s future, writing, “…By 2029, millions fewer workers will pay into the system than even the most pessimistic scenarios estimate.

Blame technology. In the next couple of decades, restaurants will be staffed entirely by robots or automated servers. Hotels will be equipped with automated check-in systems and robotic butlers. And imagine a future where driverless vehicles are the norm. That development alone will render more than four million jobs in the U.S. obsolete. Indeed, researchers at Oxford University estimate that nearly half of U.S. jobs could be eliminated by technology in the next two decades.

So, it seems that Social Security, while probably not going bankrupt, will have to undergo a lot of changes in order to regain its’ solvency.  It will need a complete retooling; factoring in an ever-changing demographic, dramatic reductions in the workforce, and increasing life expectancy.

I advise my own clients to create and control their own financial futures and to not rely on governments or stock markets to protect their wealth. There are specially-designed solutions available which can help you ensure that even if Social Security plan benefits are reduced dramatically, you will still not run out of money in retirement. These solutions have a long, proven track record of success and are not subject to the whims of either Wall Street or the government.

If you’d like to learn more, please contact our office at (800)382-0830. We’ll be happy to send you information on how our system can work to ensure you have a more prosperous and less stressful financial future.

More Americans on Board with Banking Alternatives

By Teresa Kuhn, JD, RFC, CSA

President, Living Wealthy Financial

As ATM fees and overdraft surcharges continue to climb, greater numbers of Americans are ditching traditional banks for more financially viable and often less frustrating alternatives.

An interesting survey conducted in 2015 by the FDIC, highlights the trend away from traditional banking to alternatives ranging from the much-maligned neighborhood check cashing services to more exotic instruments such as Bitcoin or smartphone banking.  (

Professor Lisa Servon, author of “The Unbanking of America: How The New Middle Class Survives,” has researched the move away from traditional banking, not only by uneducated and lower middle class groups, but also by young, affluent Americans.  Servon noted that as she began researching her book, she was surprised to discover that it wasn’t only lower income people who are unbanked or underbanked, but a growing number of middle class as well.

“..people were making oftentimes very rational decisions, and I also found out that it wasn’t just low-income people in places like the South Bronx who were using alternative financial services. It was also people who own their homes, who have college degrees, who make $50,000 or $75,000 a year. And that was a huge surprise,” she said in a recent NPR interview.

If you’ve been following Living Wealthy Financial for any length of time, you know that my favorite way to “unbank” my clients is through the use of a specially-structured Bank on Yourself© plan.  I have several clients using Bank on Yourself who do little to no business with traditional banks.

Bank on Yourself is certainly a great place to start if you are someone who wants to bypass the banking industry.  However, there are other alternatives that might be worth looking into as you strive to take control of your financial destiny.  These non-banking choices all come with pros and cons, and my advice is to spend a lot of time examining the fine print before you make any commitments.  Be sure to DO THE MATH and ensure that you know the worst case scenarios when it comes to surcharges and fees.

Here are a few choices for those who are ready to UNBANK.

  1. Bitcoin

It’s slightly sexy, futuristic, unregulated (for the time being) and it is here right now. Bitcoin is a bank alternative based on the “block chain” that was invented by a programmer in 2009. There’s no global, central clearinghouse in the bitcoin world.  Bitcoins are considered to be an experimental digital currency that is “mined” (bought and sold) via online exchanges.

Bitcoin is slowly gaining acceptance, especially with smaller online retailers and with those who are engaging in peer-to-peer transactions because transferring bitcoins to someone else is usually free.  This is in contrast to services like Paypal, which typically charge fees for transfers.

Even so, bitcoins fall a little bit on the nerd side of life when it comes to complexity and they may have some potential pitfalls. For one thing, bitcoin prices can be volatile and many larger e-commerce sites don’t accept them yet.  Still, the growing interest in bitcoin seems to indicate that digital currencies are on the verge of becoming a viable means of unbanking.

  1. Privately Issued Currencies

Private currencies are currencies issued by private parties.  These could be individuals, businesses, non-profits, or municipalities.  Today there are over four thousand privately-issued currencies in more than 35 countries.  These include barter credits, private silver and gold exchanges, and digital currencies.

A vast majority of private currencies are locally-based and considered to be complementary currencies.

For example: residents of the city of Ithaca, New York have had access to a private currency called “Ithaca Hour,” which may be used to buy goods and services locally.  Similarly, citizens in the Berkshires region of Massachusetts can use “Berkshares,” in nearly 400 area businesses.

The success of these and other regionally-based currencies has caused many cities to look into the programs as a means of increasing patronage of local businesses and provide additional revenue for the city.

  1. Online Banks

An increasing number of sites, such as Bank of Internet, USA (, Everbank  (, Ally Bank (,  and others offer the unbanked a variety of services, including mortgages, business loans, debt consolidation, and IRA’s.   The convenience of not having to wait in line to deal with surly tellers combined with lower fees and sometimes higher rates of return, make online banks a good fit for many people.

Again, if you are considering moving your money online, you need to do your homework and understand all the potential issues associated with digital banking.

Since they save on overhead by not having physical locations, online banks are able to pass on the savings to you in the form of higher interest  rates.  Unfortunately, unless the bank was built to be digital from the get-go, you could find out that online banking is less intuitive and more frustrating.  Some traditional banks that offer online services have interfaces that are difficult to navigate and don’t work well on mobile devices.  If you are considering online banking, do some research and look for a bank that was built to be digital.

  1. State-Owned Banks

As of today, there is only one state-owned bank, The Bank of North Dakota, but as consumer disillusionment with the banking industry grows there are likely to be more on the way.  In fact, nearly twenty states are seriously considering implementing state banking systems based on the Bismarck model.  A state bank differs from mainstream banking in one key aspect: deposits are guaranteed by the state and not the FDIC.  States with budget surpluses are the obvious candidates for these kinds of banks while states teetering on the brink of insolvency (California?) are unlikely to ever implement statewide banking.  Still, for a lucky few who prefer brick and mortar banking, state banking may offer better rates, more transparency, and better customer service.

  1. Credit Unions

Are you one of those “little bit country, little bit rock-and-roll” folks who enjoy the benefits of technology, but also need human contact when it comes to finances?  If you are, then you might consider joining a credit union instead of putting money in one of the Big Banks.

Credit unions are not-for-profit financial organizations that are member-owned cooperatives.

Like banks, credit unions arrange loans, set up retirement accounts, take deposits, provide ATM services and an array of other financial services.  In general credit unions provide a safer place to save and allow their members to borrow at reasonable rates.  Their lower operating costs allow them to pass on the savings to their members.

Credit unions are often offered as a company benefit.  There are also credit unions that are community-based.  If you live or work in the community, then you probably qualify for membership, which can save you thousands in fees as well as provide you with many valuable benefits.

  1. Prepaid Cards

Prepaid cards function like credit cards, letting you shop online and swipe for purchases.  With these cards, you put your cash right onto the card, and are limited to spending only the available amount.

Several years ago, prepaid cards were not an ideal choice due to high fees and lack of features such as cash back and points programs.  However, as more big names have entered the arena, prepaid card providers have lowered their fees and added features to attract customers.

Many well-known financial services providers offer prepaid cards. Chase now offers Liquid, and American Express and Wal-Mart have Bluebird.  These cards allow a user to remotely deposit checks to by taking a picture with your phone, and pay bills online. Many times, use of in-network ATMS is free.

These are just a few ways Americans, including the affluent and entrepreneurial-minded, are divesting themselves from traditional banking and getting more control over their finances.

If you have questions about how you can begin the process of “unbanking” yourself, call our offices at 1(800)382-0830 and arrange for a telephone consultation with one of our trained experts.

7 Inconvenient Truths about Indexed Universal Life Insurance That You MUST Consider Before Purchasing a Policy

By Teresa Kuhn JD, RFC

President, Living Wealthy Financial

More and more financial strategists are acknowledging the power of life insurance as a cash flow management tool and essential component of a well-planned financial future.  Unfortunately, the advent of more complex, “hybrid” insurance products, such as indexed universal life, has led to some confusion about the best type of policy one can use to ensure safe growth, lower risk, and liquidity.

My clients are well-educated about the advantages of specially structured, dividend-paying whole life insurance policies such as the ones I use.  However, for those only beginning to build their financial cornerstones, a plethora of confusing new insurance options accompanied by hyperbole and often misleading marketing tactics, has them wondering if whole life really is the best option.

If you’re reading this, chances are it’s because you have either been approached by an agent touting indexed universal life as being superior to dividend-paying whole life or you’ve read an article or advertisement in a financial magazine claiming that you can get “8% returns.”

You may be seriously considering using IUL to manage your wealth because you’ve been advised by a friend or colleague that it is safe, secure, and has many advantages over anything else available.

I encourage you, before making decisions with your finances from which you might never recover, to consider some of the compelling reasons why I never recommend indexed universal life insurance to my clients (no matter what their risk tolerance)  and why you should think twice before purchasing this type of policy.

It always pays to get a second, or even a third, opinion when purchasing ANY financial product.  If you’ve been presented with a proposal for indexed universal life or other insurance products, call my office at (800)382-0830 and arrange for a free consultation.

I won’t try and sell you anything, but I will be able to review insurance proposals you’ve received and give you my honest opinion. I will also send you free information about other methods available for ensuring that your nest egg stays intact and grows safely and sanely.

In the meantime, please read on to learn a little more about indexed universal life insurance and why, in spite of the big commissions dangled in front of my face, I have never wanted to sell this product to my valued clients:

  1. The cost of insurance can go up for Indexed Universal Life insurance contracts.

In December, 2015, Investment News reported that, due to the continued pressure of low interest rates, several major insurers including AXA, Transamerica, and Voya Financial had increased the cost of insurance for some of their Indexed Universal Life policies.

While all insurance policies have costs that the policy owners pay, IUL costs are a little different as they are subject to increases at the insurer’s discretion at any time.

Owners of IUL policies can pay insurance costs from their own pockets, from the cash value of their accounts, or a combination of the two.  As long as there is a positive cash value, the death benefit stays in force. If, however, policy premiums can’t be paid, the policies lapse and owners lose the death benefit.

This isn’t always explained very well (or at all) by the agent selling the IUL policy.  Often internal fees are shown on illustrations at current expense levels, with no mention of the fact that the company can decide to increase them, sometimes by as much as 40%.

I could write a whole article just on this one point, but at the risk of having your eyes glaze over from too much math, let’s just say that there are many devils hidden in the details of an IUL policy and those could make for some nasty surprises when it comes time for you to retire.

  1. IUL defeats the very purpose of insurance by exposing you to MORE risk.

A brief history of the death of the pension plan and the rise of the IUL

Before the advent of 401(K) plans, most American workers could count on their employers to provide them with defined benefits plans, also known as pensions. These plans rewarded loyalty and hard work with the promise of a steady, predictable monthly income in retirement.

Pensions were an essential part of the corporate culture in America and in many other places in the world.  In those days, it was a culture that placed a high value on taking care of employees by providing a benefit that created guaranteed future income.  The risk of this benefit rested solely on the shoulders of the corporation.

All of that changed, however, in September 1980, when a Philadelphia benefits consultant named Ted Benna found an overlooked codicil in the tax code known as section 401(K).

Section 401(K) said that employees would not be taxed on income they chose to receive as “deferred” compensation, meaning money they wouldn’t use until later.

Although this provision had been passed two years earlier at the behest of bank holding companies, Benna realized that nothing in the wording of the law limited its’ application to just bankers. Using the 401(K), any company could theoretically create savings accounts in which employees could place some pre-tax money every paycheck.  Employers might or might not choose to supplement this money.

Early adopters of the 401(K) claimed it would be a great way to encourage personal retirement savings and to help companies who lacked pension plans put them in place more easily.

These new “defined contribution” accounts were also seen as useful to a workforce that had begun to move from company to company more than ever. People could, in theory, be freer to leave one company for a better opportunity because their 401(K) plan could go with them.

Corporations naturally recognized these plans as a great alternative to more costly defined-benefit plans.  Getting rid of defined-benefit plans and replacing them with 401(K)s invested in mutual funds seemed like a good business decision.

Even unions, under pressure by companies to agree to benefit cuts, were lured into replacing their traditional pensions with 401(K)s in the belief that their members would now be able to participate in higher returns on the stock market and have more flexibility in retirement planning.

During the period when the market prospered, employers saw an opportunity to gradually scale back their company contributions to retirement plans or replace these contributions with shares of their own stock.

These plans succeeded in saving money beyond anyone’s expectations. It soon became obvious that 401(K) plans were not going to supplement plans, as originally predicted, but were actually destined to replace them.

In 2016, only a handful of corporations continue to offer defined benefits plans and the majority of those have closed existing plans to new employees, replacing them with 401(K)s.  Today, the majority of existing pensions belong to union employees, especially government employees.

The fallout from 401(K) plans…

What does this shift away from defined benefits plans mean in the long term?

Well, for one thing, it transfers ALL the risk and responsibility for retirement planning to the employee and away from the employer. Where before negative situations such as stock market meltdowns and poor interest rates were dealt with by the company, 401(K) plans rely on employees’ ability to understand and interpret trends and know exactly what their mutual funds contain. 401(K)’s assume that employees can and will manage their plans and get the most from them, especially in turbulent and confusing financial times.  Most experienced wealth advisors agree, however, that that is just not happening.

Another issue which has arisen as the popularity of 401(K)s has increased is that mutual funds, one of the main vehicles used to fund self-directed plans, have become de facto witches’ brews that contain all manner of sketchy instruments masquerading as legitimate investments. Created by banks and Wall Street, these toxic bundles often consist of things such as debt, mortgages, and derivative stocks.

These suspicious “investments” are packaged together and often used in mutual funds which then wind up as choices for employee plans.   Some of the mutual funds are like the “mystery meat” served in school cafeterias.  No one is quite sure what is in it, no one wants to ask, and it is assumed that ladling on the gravy will hide any bad taste.

But you can’t blame employees for doing anything they can to help swallow the bitter pills of a shaky economy.

Over the past few years, employees they’ve been punished by artificially low interest rates and have seen little to no growth in their retirement plans. They are forced to search for relief and growth potential anywhere they can find it.

That’s why indexed universal life insurance, with its’ flashy marketing and alluring promises of interest rates as high as 8%, has captured the attention of many people looking for safe growth.

Retirees and pre-retirees are being sold universal life products in the hope that they can outperform a whole life policy by allowing participation in the market.  Since they are now conditioned to assume all retirement planning risks themselves, many people fail to question these claims or even ask themselves if indexed universal life insurance is a very good idea at all.

When people question me about IUL, I ask them this question: “If IUL is such a sound investment strategy, why don’t insurance companies use it in their overall portfolio? “

I believe the answer to that question is that insurance companies understand that over time, the slow and steady approach will almost always outperform the market.

And, although an IUL illustrated with 8% returns each year, could potentially achieve those returns, it is highly unrealistic that the market will and can return this much year after year.  This fact has insurance regulators beginning to question just how realistic many of these projections are.

Further highlighting the problems with most IUL illustrations is the proliferation of lawsuits for deceptive marketing practices now faced by companies and agents selling IULs, NY regulators in particular are investigating the sales practices of advisors who sell IULs , who “may be giving buyers overly optimistic projections of potential gains in the policies”.

Since the performance of the IUL is tied to the performance of the stock market, and since corrections in the market are a near certainty, those considering IUL must ask themselves how such corrections will affect the projected returns of their policies.

Add to that the fact that there will still be insurance costs, fees, administrative costs, etc., compounding any poor performance of an IUL in a down market.


  1. With IUL, you could be paying premiums for the rest of your life.

Unless you have what is called a “no-lapse guarantee” written into your IUL policy your death benefit is not guaranteed.  This means that if the index performance is sub-par or costs increase (or both), you may have to increase your out of pocket premiums to keep the death benefit in force.

For most people, the death benefit is an important part of their life insurance; a way to ensure that loved ones don’t wind up saddled with financial burdens. Life insurance is also used to create or enhance legacies that will be passed on to children or grandchildren.

If this is one of your reasons for purchasing life insurance, then you need to ask yourself if you really want to be worrying about paying premiums, month after month, for the rest of your life or risk losing your insurance.

Wouldn’t it be better to have a product where you could eventually stop having to pay an insurance premium?

  1. IUL is often too complex.

Over the years, I have noticed a trend of financial products being built with such complexity that even those who sell them have difficulty explaining how they work.  It’s almost as if these vehicles are deliberately designed to confuse consumers and keep them from asking their insurance agent too many tough questions.  IUL is one the products, in my opinion, that has so many moving parts that is difficult for the average person to ask the right questions before deciding to purchase.

On the surface, IUL appears to be similar to the more familiar whole life insurance policy. Just like whole life, IUL is built around two basic components. First, there is insurance that pays a death benefit and there is a cash value account from which you can borrow money tax-free (but not interest-free) in order to pay for big ticket items such as cars, real estate, educational expenses, and retirement.

Unlike whole life insurance, however, an indexed universal life policy adds an intriguing twist – allowing you to participate in the stock market, not directly, but by purchasing an option on an index. This feature is a difficult one to explain to a consumer who is being enticed by the potential for huge interest rates they see on an IUL illustration.

The way IUL’s are credited is also difficult to grasp.  Each month, cash value is credited with interest, and the policy is debited with the cost of insurance (COI) along with other policy charges and fees. As I mentioned earlier, costs can and DO go up.  If the premium paid to an UL policy is greater than the cost of insurance, then the extra is credited to the cash value.  If no premium payment is made that month, or a premium payment that is less than the actual expenses of the policy, then additional amounts are taken from the cash value.

There’s a lot of math to consider with an IUL, and a lot of ways in which you can become confused and even misled.

Experience has taught me that the more complicated a product is, the more that complexity favors the insurance company, rather than the consumer.

“Wouldn’t you prefer to understand the product that forms the cornerstone of your financial future?”

  1. IUL has “cap rates.”

One of the complicated IUL features that could come back to haunt a policyholder who is lured by illustrations of great returns is the so-called “cap rate”.   Most IUL products have a cap rate built in that is often either downplayed or not mentioned at all by the agent.

A cap rate means that means if the stock market has a really great year, such as in 2013 when there was a 30% index return, your IUL contract is capped at some lower figure, often in the 10% to 15% range.

If you’re attracted to IUL because of the potential large gains, this matters a lot. Imagine if your policy had a cap of 10%. Any time the S&P 500 index returned more than 10%, all you would get is just that 10%. Given that since 1928, the S&P has had index returns exceeding this rate over half the time, you could wind up with a lot less money than if you had just made sound investments on your own.

  1. In some IUL policies late premiums can kill guarantees

For most indexed universal life contracts, late premiums remove any guarantees in the policy.  Even if the premium is finally paid, once it is late, the insurance company is off the hook for promises they made concerning cash value amounts, guaranteed premiums, or death benefits.

In many cases, the insured may not even be aware that a pre­mium wasn’t made on time and that their guarantees have been forfeited… until it is too late.

In the span of a 50 year policy paid monthly, which is 600 or more payments, do you think there is a likelihood that a mis­take could be made by the pre­mium payer, the post office, the bank, or the humans working at the insur­ance com­pany?

  1. No proven track record makes IUL’s less than predictable…

The concept of whole life insurance has been around for more than 150 years while what we currently call indexed universal life has been marketed for less than 20.

This abbreviated track record means that none of the illustrations put forth by sellers of IUL have history backing them. They are, in many cases, wishful thinking on the part of an insurance company’s marketing department.

Available data from the short history of IUL indicates that actual returns for these policies are closer to those of fixed products, around 4% or less. This is a far cry from the 8% rates often found on illustrations.

Most of the time, whole life insurance comes out ahead on the guaranteed side. This gives you a lot more of the certainty which is critical in determining your income at retirement.

At some point in an IUL, the cash value gets completely depleted and, as we’ve noted previously, the death benefit goes away unless you a no-lapse guarantee written into the policy.

Do you want to trade certainty and predictability for uncertain gains?

In conclusion, I’d like to say that regardless of what financial vehicle you are considering purchasing, you should always take time to research beyond the sales and marketing materials you’ve been given by the salesperson.

Learn to ask questions that let potential advisors know that you are actively involved in charting your own financial future.  If these agents or advisors are unable or unwilling to answer your questions, then you might want to think twice about proceeding.

Be sure you scrutinize all proposals and contracts carefully and get a second opinion from a financial advisor who can act as an unbiased third party.  Make a list of all your options, with a side-by-side comparison of the pros and cons of each.

As you near retirement, or even if you are just thinking about doing so, you can’t count on being able to recover from any mistakes you make when you plan.

There is an incalculable benefit to critically examining each and every part of your wealth preservation strategy and doing only those things which create certain outcomes, predictable streams of wealth, and which give you peace of mind.

Special Report: Don’t Have a Bank on Yourself® Structured Policy?

Here’s what you might be missing…

If you are like many people, you may not know there is a time-tested and legal way to invest your wealth that provides you with liquid, predictable, tax-deferred growth; and allows you to control your money without the risk of stock market losses. This powerful tool will provide you with a LIFETIME income that you can’t outlive.

By Teresa Kuhn, JD, RFC, CSA
President, Living Wealthy Financial

People often ask me, “What is Bank On Yourself® and how does this amazing strategy compare to traditional financial planning?” In this short report, I’d like to take a look at how Bank on Yourself® compares to the ‘same old same old’, when it comes to growing and preserving wealth.

The typical financial plan hasn’t really evolved that much over the years. It usually goes something like this:

  1. Clients are told to ‘diversify’. They are advised to use a diversified asset allocation strategy to alleviate risks and take advantage of stock market growth.
  2. Advisors look for ways to maximize government-sponsored plans such as 401(k)’s, IRA’s, etc., to defer taxes.
  3. Clients are sold the illusion that taxes will go DOWN when they get older.

So, is old school financial planning actually working in the chaotic and volatile 21st century?

Well, according to the National Institute on Retirement Security (Read the report by clicking HERE) the median retirement account balance in the United States is a meager $3,000 for all working-age households and only $12,000 for households nearing retirement age.

The report states, “Two-thirds of working households age 55-64 with at least one earner have retirement savings less than one times their annual income, which is far below what they will need to maintain their standard of living in retirement.”

The Diversification Myth

I don’t deny that the stock market has occasionally been an engine of wealth creation for some people. Unfortunately though, the market’s ups and downs have included more downs than ups.
Although historically the stock market has averaged one down year for every seven up years, that hasn’t been the case recently. There have been three down years and one flat year over the last 13-year period.

People who have relied on equity markets for their retirement account growth have had a rough ride these past few years. My research leads me to believe that this trend will continue in the future. Sadly, it is more and more difficult to recover from market downturns, especially for those nearing retirement age.

Do you REALLY think taxes will go down in the future?

Many people incorrectly classify government-run programs such as Social Security as ‘entitlement’ programs when they are anything but. The idea that government can be held accountable for it’s promises would be amusing were it not for the fact that so many people have built their retirement plans with the idea that the government owes them Medicare or Social Security.

In reality, the U.S. government is not locked into paying a certain amount based on existing terms, as in the case of a mortgage for example. Nor are the terms themselves written in stone as demonstrated by numerous changes Congress has made to them over the years.

Government sponsored qualified plans are also flawed owing to their associated taxes and tax penalties. Your advisor or human resources person might have warned you when your plan was set up that if you need access to your retirement savings before age 59 ½, you will have to pay taxes based on your current income and an early withdrawal penalty of 10%.

Even if you wait until you are 60 years of age or older you are still subject to taxes at current rates. If you fail to take the ‘required minimum distribution’, which is the minimum amount of plan money that must be accessed after you reach age 70 ½, then
you will then be subject to taxes at the current rates plus a penalty of 50% on the money that should have been withdrawn.
Those who happen to be in one of the higher tax brackets rarely if ever retire in a significantly lower tax bracket. Thus, the argument for delaying taxes to some future date when tax rates are supposedly going to be lower is generally an unfulfilled promise.

So it looks as if future taxes will probably be higher for most, not lower, due to our exploding national debt as well as tens of trillions to fund Social Security and Medicare.

Naturally, the people who will be expected to pay for this will be people with taxable income. All monies taken out of qualified plans are taxable, at the then current rates when income is taken.

So, with taxes likely to go up in the future, paying them now looks like the best course of action for nearly all Americans.

It’s hard for most people to wrap their heads around a simple, but sobering fact:

Combined consumer and government debt is far larger than the total amount of money in existence!

If one were to empty every single bank account, coffee can, piggy bank, in the country, turn over every seat cushion and mattress, drain all the 401(k)’s and pension plans, there still wouldn’t be enough money to off the country’s massive debt.

Some economists and policy makers go so far as to predict that by 2025, interest alone on the national debt along with mandatory spending on programs such as Social Security, Medicaid, and Medicare will exceed total government revenue.

What can be inferred from all of this? I believe we can count on taxes going UP not DOWN in the future. Old-fashioned planning was built on the idea of ‘decreasing responsibility’ and attached to the notion that expenses will decrease as one ages, along with taxes.

Such planning also assumes that somehow government will miraculously pay down the debt. There is just no way that is ever going to happen, especially as our population ages and is replaced by smaller, poorer generations.

When you devote some time to studying this situation, it is easy to understand why relying on government programs and decreased taxes as the cornerstone of a sound financial blueprint is problematic, even highly risky.

At this point, you may be thinking, “If I can’t count on retirement solutions from the government, what are my alternatives?”

In my experience as a financial strategist, I have found that the life insurance industry has the best IRS-approved retirement savings plan today.

Many planners, especially those who are not insurance specialists usually have no knowledge about how these products really work. That’s why they either don’t recommend them to their clients or discourage their clients from looking into them.

What I am talking about here is not a qualified plan or an investment that goes inside one. It takes taxes and qualified plans out of the picture completely.

This ultimate cash management solution is called a ‘specially-structured whole life insurance’ policy. It offers a risk profile similar to that of a money market fund, but with the potential for higher interest, avoiding the risk of the stock market.

This custom-designed insurance policy is the engine that drives the Bank On Yourself ® concept and strategies. It allows you to put your money into a product that can grow tax free and never be subjected to downside market risks.

How does a Bank On Yourself ® plan work?

the-bank-on-yourself-book-coverBank On Yourself ® is a unique cash management system that uses a little-known ‘turbo-charged’ version of dividend-paying whole life insurance- an asset that has increased in value during every single market crash has proven resilient during every economic boom and bust cycle for more than 160 years.

This is not the same kind of policy your parents or grandparents may have had,or the type of policy many financial advisors and journalists claim is a bad investment that should be avoided.

Instead, with this particular strategy of structuring divindend-paying whole life insurance, you don’t have to die to win. The concepts behind Bank On Yourself ® are becoming more popular as people realize that Wall Street and the banking community are not usually on their side when it comes to protecting wealth.

In a Bank On Yourself ® plan, the majority of your premium goes into riders that make the money in the policy grow significantly faster than a traditional whole life policy. To accomplish this, all Bank On Yourself ® Authorized Advisors must also undergo thorough and rigorous training that prepares them to create custom plans that are tailored to their clients’ individual needs and situations.

Only 200 advisors nationwide have been able to meet the strict requirements of Bank On Yourself ® and they are the only ones with the expertise to structure your plan so that it retains all the tax advantages and achieves reasonable and reliable growth.

A Bank On Yourself ® policy is not invested in the stock market and it does not shift the risk and burden of managing the policy to the policyholder as do other insurance options such as Indexed Universal Life. With universal life and other types of so-called ‘permanent insurance’, a policy owner could find him or herself having to pay skyrocketing premiums just to keep the policy from lapsing. If they are unable or unwilling to pay these increased premiums, they may risk losing everything that has been paid into the policy over the years.

In a properly-designed Bank On Yourself ® whole life policy your costs, premiums, cash value, and death benefit are predictable. In this plan, everything except the dividend is known, guaranteed, and determined in advance. Your cash value is guaranteed to equal your death benefit when the policy matures. This predictability is one reason more and more people are choosing Bank On Yourself ® over other, riskier options.

Liquidity, control, and TAX advantages of Bank On Yourself ® structured policies

As I mentioned before, some of the major benefits of a properly structured Bank On Yourself ® policy are the ‘living benefits’. One of these is the tax advantage afforded by using whole life as a savings vehicle. In a whole life policy, you accumulate cash value which you can access, as needed, for large purchases such as cars, college tuition, vacations, income-producing property, etc. You could also use the cash value as a hedge against emergencies such as unforeseen medical issues, sudden loss of income, even natural disasters that might impact your quality of life.

When you access this cash, it is actually categorized as a loan against the cash value and uses the policy death benefit as collateral for the loan. In other words, if you don’t pay back the loan, it will be deducted from the death benefit (along with interest due) before the company pays the claim.

According to the policy contract, the policy owner may access the cash value and can borrow that money for any reason with no intrusive paperwork needed. With Bank On Yourself ® you won’t find yourself jumping through hoops or begging your banker to release your cash. You won’t have to worry about your credit score or feel as if your privacy is being violated every time you take out a loan.

Best of all, unlike some other permanent life insurance products, well-designed Bank On Yourself ® policies will have cash value the very first month. Other policies take 2-3 years or more to accumulate any significant amount of cash.

A qualified Bank On Yourself ® Authorized Advisor knows and understands the tax advantages of this amazing product. When you decide to access your cash through policy loans, there are no tax implications so long as your policy was set up correctly and you never have to pay back these loans.

The IRS has strict legal guidelines as to how cash values may remain tax-advantaged and Bank On Yourself ® policies are specifically designed with these guidelines in mind. This means you will not trigger a taxable event when you access your cash via loans (under current tax laws) in stark contrast to government sponsored qualified plans which have both taxes due and an additional 10% early withdrawal penalty if you decide to access your money before age 59 ½.

Should you find your circumstances challenging and you’re unable to make your loan payments, you don’t have to worry about getting calls from collection agencies or black marks on your credit report.

The greater peace of mind that having such increased flexibility and control creates is priceless, and for many clients, the very best thing about Bank On Yourself®. With the help of their Bank On Yourself ® Authorized Advisor, policy owners can design repayment plans that fit their unique situations and avoid having their policies collapse due to unpaid loans.

Summing it all up…

Why should everyone consider using Bank On Yourself ® to build a rock-solid financial cornerstone? There many reasons to consider starting a Bank On Yourself ® structured policy right now, including:

  • Bank On Yourself ® structured policies are custom-designed to fit each client’s particular needs. These aren’t ‘off-the-shelf’ one size fits all policies. Customizing a policy greatly enhances how well it will help clients achieve their goals.
  • Bank On Yourself ® keeps your hard-earned cash from winding up in the pockets of Wall Street con artists, bankers, and others who seldom have your best interest in mind.
  • Properly structured Bank On Yourself ® policies allow you to gain access to your money without tax liabilities
  • You never need to submit a credit report or divulge personal information in order to borrow from the cash value. Your ability to borrow isn’t predicated on the whims of someone in your bank’s loan department.
  • If you miss a repayment to your policy, you don’t need to worry about damaging your credit or being hassled by collectors.
  • You can use your money for any purpose you choose without having to answer to a loan officer or underwriter.
  • You get to work with qualified, competent Authorized Advisors who willingly give up standard commissions to help your account grow. Bank On Yourself ® Authorized Advisors are a different breed. They do this because they believe in the concept of financial freedom, not because they are looking for huge commissions.

With all this in mind, I can’t think of any reason that most people who are serious about controlling their own financial destinies would not want to have a Bank On Yourself ® structured policy in place. It will provide you greater peace of mind than you have ever experienced before and give you a cash management tool that is unrivaled in it’s flexibility and safety.

Regardless of whatever else you have in place with your current financial consultant, you should consider speaking with a Bank On Yourself ® Authorized Advisor to ensure that you don’t miss out on the benefits this extraordinary tool provides.

I am happy to answer any questions or concerns you may have, as well as provide a no-cost second option of your current financial plan or insurance policy.

Call our office at (800)382-0830 today to arrange a telephone consultation.

Together, we can discover whether Bank On Yourself ® is right for you and outline the steps you need to take to be well-planned now, and in the future.

Teresa Kuhn JD, RFC
President, Living Wealthy Financial Group

Like 2006 All Over Again? Could the U.S. Be Headed Into Another Housing Bubble?


This ‘micro-house’ in Brooklyn, NY built from a tool shed, was recently listed on Trulia for $500,000…

by: Teresa Kuhn, President/CEO, Living Wealthy Financial Group

Will 2016-2017 see a repeat of the housing meltdown that pulled our economy into a recession and destroyed millions of dollars of Americans’ wealth?

I’ve been looking at the trends lately and am seeing a disturbing amount of irresponsible practices creeping back into the marketplace; practices that directly contributed to the bursting of the last bubble.

The idea that a housing bubble is barreling down on us is controversial, to be sure.  Real estate industry insiders say that even though standards have loosened a bit lately, they are nowhere near what they were in the days of stated income and no down payments.  There is a lot more documentation and a whole new set of requirements and hoops that must be navigated prior to purchasing a home, they claim.

However, I have observed some unsettling trends that I believe will ultimately lead to another marketplace crash in the near future.

Loans are getting easier to get

Standards are once again loosening up with risky loans disguised as something innocuous. Many of these loans are, in fact, the same highly risky, subprime-style loans we had during the meltdown. The only real difference is now they are now being made with government (taxpayer) guarantees rather than originating with private investors. In spite of being coated with government promises, they reek of risk.

Mortgage software company Ellie Mae recently reported that the average FICO credit score of an approved home loan plunged to 719 in January, 2016 down from 731 a year earlier. This figure is well below the peak of 750 in 2011.  Lower FICO scores, of course, correlate directly to higher risk of loan defaults. This is a dangerous sign that lenders are continuing to loosen underwriting standards.

Home prices are rising a lot relative to income

For the past few years, home prices have been rising about 5%-6% a year, but incomes are growing at only about 2% or 3%.

What does this mean? It is a tell-tale sign that housing affordability is worsening. As fewer people can afford homes various players in the housing market have a lot to lose and are pressured into relaxing lending standards even further to preserve the illusion of growth.

On the other hand, construction of new housing units over the last four years is at around half the pace of the bubble year construction. This lack of supply pushes home prices well above people’s ability to pay.

Flipping is once again a hot pastime

Another sign that the real estate market is teetering on the brink of collapse is the resurgence in popularity of real estate speculation and home “flipping”.

Flipping is once again trendy and hitting levels not seen since just prior to the last mortgage crisis. In 2015, almost 180,000 homes were sold and then resold last year — the highest level since 2007. Frenzied flipping in metro areas such as New York, San Diego, and Miami is actually exceeding peaks set back in 2005. Low interest rates and easier credit once again make this possible.


After researching current real estate market behaviors and seeing history repeat itself, I can’t help but side with economist and demographer Harry Dent.

Writing in Economy and Markets, Dent observed:

“… I’m predicting net housing demand will fall – even turning negative over the next two decades – especially starting later this year.

This critical demographic indicator shows it won’t turn positive again until after the year 2039 – 23 years from now. The same indicator explains why the echo boom in Japan never caused a bounce in housing even after its all-time bubble highs and 60% crash.”


“Brexit” Triggers Wave of Nations Clamoring for Sovereignty. What Does This Mean for the U.S.?

by Teresa Kuhn JD, RFC

President/CEO, Living Wealthy Financial Group

Logo_brexit_new_size2One of the many unfortunate side effects of globalism is the inevitable market reaction to any unexpected event.  When a thread comes loose in one country, no matter how far away that country may be, it usually results in upheaval everywhere else.

Britain’s recent decision to exit the European Union was a shocker that blindsided everyone from policy pundits to betting parlor odds makers.  Most of the experts thought it inconceivable that Britain would ever decide to leave the European Union, no matter how unpalatable the bureaucracy was to the average Brit.

That’s why the vote to exit has sent most major markets into panic-driven slides, with Wall Street poised to have its’ worst month since January.

Markets are notoriously unpredictable so it’s hard to know what impact “Brexit” will ultimately have on Americans and how long will this impact last.

My own research indicates that Americans can expect the following as a result of the decision to leave:

1. A stronger dollar.

While this is great for tourists planning their European vacations, the long term effects of a strong dollar on the economy are not well understood. Even experts disagree on whether the return of a robust dollar is a good thing or a bad thing. One outcome that is nearly inevitable is that a strong dollar gives the Fed another reason to avoid raising interest rates. Fed Chairwoman Janet Yellen recently admitted that “Brexit” concerns were indeed a factor when she decided not to press ahead with plans to raise rates.

2. A potential re-finance boom.

Pressure to keep interest rates at historic lows could trigger a new wave of refinance as home owners scramble to lock in rates that will save them thousands on their mortgages.

3. Falling CD and Bond Yields.  

Another potential impact from the dollar strengthening against the pound is that yields from U.S. certificates of deposits and treasuries could drop significantly. Bond and CD yields move in the opposite direction of their pricing.  Since yields are already very low, further drops would be harmful to more conservative investors as demand increases and yields dry up.

These are only three of the most immediate economic results that I see coming from “Brexit”. There is no consensus among economists regarding the long term effects of this decision.

If you have optimized your Bank On Yourself policy, you have safeguarded your wealth against some of these negative impacts.  You also have the means to take advantage of opportunities to make solid investments and purchase quality stocks at lower prices.

Living Wealthy Financial will continue to monitor the situation overseas and give our clients insights and information to help them make the best possible financial decisions possible in this uncertain world.

If it has been a while since you’ve spoken with us, call (800)382-0830 today and make an appointment to discuss your questions and concerns.

What IS Asset Protection and Why Most People Need it Regardless of Their Financial Status

By Teresa Kuhn, JD, RFC, CSA

President, Living Wealthy Financial


asset protectIf there is one money myth that can really come back to haunt you, it’s the pervasive (but incorrect) notion that only the very wealthy need to think about protecting their assets.

There is an understandable tendency for many people to believe that “asset protection” is a financial strategy benefitting only multi-millionaires or those in professions vulnerable to lawsuits, such as doctors, dentists, lawyers, engineers, and consultants.

This belief may explain why so many Americans have done little or nothing to protect their wealth from potentially devastating occurrences such as lawsuits, health crises, divorce, failed business ventures, and personal bankruptcy, among others.

Hard-earned wealth can quickly evaporate as a result of any of the events I mentioned above and others that no one could ever anticipate.   Modern asset protection techniques exist to shield you from these possibilities and provide some extra peace of mind and a greater measure of control.

Using these strategies in a blueprint designed by a qualified planner can help protect your children or other heirs and safeguard against adverse consequences.  A well-thought-out plan will ensure that your final wishes are carried out and lessen the possibility of family squabbles and tension.

Asset protection planning is needed not only by the super-rich but also by those of moderate wealth; people who own anything of substantial value, such as land, a commercial building, home, intellectual property and patents, or equipment and vehicles.

If you own or have inherited any of these kinds of things and you want to do everything possible to ensure that you will be able to pass them on to your heirs, and not the courts and lawyers, I recommend you start putting together a strategic asset protection plan that is done well before it is ever needed.

Here are some components I feel should be in every asset protection plan.  This is by no means an exhaustive list, and I highly recommend seeking the services of an asset protection specialist.  But I am hoping that this will help you start the process.

  1. Your will. Most people with whom I speak seem to understand that a will is a critical component of an asset protection plan.  Yet, amazingly, nearly 60% of Americans do not have a will, even though as far as legal documents go, it is usually inexpensive and easy to have prepared.  Bear in mind that a will is only part of an estate planning solution.   Dying without a will (“intestate”) is never a good idea.  On the other hand, just because you have one doesn’t mean the job of asset protection is done.   If you haven’t drawn up a will yet, or your current will hasn’t been updated in a number of years, contact me and I will help you find resources to get your will done.
  2. Durable power of attorney. In some ways this could be even more critical than a will.   A durable power of attorney allows you to appoint a trusted friend or relative to be your agent to handle specific duties and decisions should you become incapacitated.   This document is crucial to a sound asset protection plan because if you were to become incompetent or otherwise incapacitated without it, your loved ones would be prevented from making many important health and financial decisions on your behalf.  When this occurs, loved ones who need to make those decisions are forced to go to court and seek appointment as a guardian, a process that can be time-consuming and costly.
  3. Property Insurance  Good property insurance, such as homeowners’ insurance, umbrella policies, business insurance, professional liability, and even auto insurance with more than the minimum amounts of liability, can be valuable in keeping your wealth safe.   The goal here is to have enough insurance so that anyone who sues you will be willing to settle with your insurance company and not go after your home or other assets.
  4. Life insurance Depending on the state in which you live, a creditor may not be able to claim either the cash value of a life insurance policy or the death benefit. In some states this is also true of annuities.  This makes specially designed permanent life policies, such as those I use for my Bank on Yourself clients, a natural choice for inclusion into an asset protection plan.  Again, you must consult an asset protection specialist who is an expert on the creditor protection limits in your state to see how much protection life insurance will actually afford you.
  5. Trusts Many people associate trusts with tax havens for the rich and famous, but the fact is a trust can benefit anyone who owns anything of value that needs protecting.   There are nearly as many kinds of trusts as there are people who need them.   I don’t have time to go into them in any detail here except to say that a trust designed by an expert in asset protection can be your most valuable tool to ensure that your final wishes are carried out and your family gets access to your assets

Obviously, I’ve only scratched the surface when it comes to asset protection planning.  The important thing is to get you thinking about what you need to do  right now to keep your wealth safe and intact for future generations.  I would love to discuss asset protection and other financial issues with and provide you with valuable resources.  Schedule a consultation today by calling our office at (800) 382-0830 .

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