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:
- 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.
- Advisors look for ways to maximize government-sponsored plans such as 401(k)’s, IRA’s, etc., to defer taxes.
- 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?
Bank 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