Personal Finance Blog for Retirement and Investment Advice

Trading a Pension for Tension: Why You Need a Safe Money, Guaranteed Income Strategy for Retirement

Today, as you try to figure out a safe money retirement income strategy, you’ve got a lot to consider:

  • The market goes up, and the market goes down. Will it be down when you need to sell some of the assets in your retirement fund? How can you control your financial future when Wall Street is absolutely unpredictable?
  • What about inflation and taxes? What if you put your money into safe CDs, only to get clobbered by inflation? Will higher taxes give you less money to spend in retirement – just when the cost of everything is going up due to increasing inflation?
  • How can you plan your withdrawals if you can’t know for sure how long you’ll live? Over the last century, life expectancy in this country has mostly gone up. How can you be sure your retirement savings won’t run out before you do? And what’s your Plan B if your money does run out?

If you don’t have answers to these questions, join the club! These are the challenges we all face when planning for our retirement, but there are proven strategies that can guarantee you can put these challenges behind you.

Just a few generations ago, folks didn’t need to worry about these issues. Up until the 1960s and ’70s, employer-sponsored pension plans gave workers a paycheck for life – no matter what the market did or how long the retiree lived.

Today, fewer than one in five American workers have access to a company pension plan, and just 15% participate in one, according to a Bureau of Labor Statistics survey.

These days, if you’re an employee, your company likely offers a 401(k), 403(b), or similar plan instead of a pension. Why? Companies realized that it’s much cheaper to tell employees to fend for themselves (and perhaps offer a small matching contribution when times are good) than to fund and manage guaranteed pension funds. Thus, the burden of saving for retirement shifted from companies to their employees. That would be us.

And the manager of your plan invests your money in what I call the Wall Street casino. Like any other casino, Wall Street is something you cannot control or predict.

Pensions have become an endangered species. The stock market is unpredictable. Interest rates on savings accounts and CDs are so tiny you need a magnifying glass to see them. And we’re all living longer.

We’re experiencing the perfect storm for whole generations of retirees to end up struggling financially in their later years – no matter how conscientious they’ve been.

Consider the Problems You’ll Face if You Live a Long Life:

  • If you take too much out of your retirement nest egg each month, you’ll run out of money when you are most vulnerable
  • But if you don’t take enough money, you may live in what I call voluntary poverty because you’re afraid you’ll use up your resources and have nothing to live on

And these scenarios don’t include other associated costs with retirement and getting older, such as healthcare costs not covered by Medicare!

Either way, your so-called golden years would be full of worry and fear instead of being the enjoyable, carefree years you should have after putting your nose to the grindstone for 40 to 50 years.

Even a pension isn’t a guarantee of a comfortable retirement. What may sound like a generous monthly payout now could be eaten up by inflation, taxes – or even the death of a spouse! After working hard for decades, it doesn’t sound fair, does it?

However, you don’t need to rely on the Wall Street Casino or, if you have a pension, worry about running out of money in retirement. There’s a tried-and-true path to guaranteed retirement income. Consider Cindy’s* story…

Please email me my
Consumer Guide to a Guaranteed Lifetime Income!

Nurse Gets a 27% Bump in Guaranteed Retirement Income

Please email me my
Consumer Guide to a Guaranteed Lifetime Income!

Cindy is retiring after a long nursing career with a national healthcare organization. The benefits counselor for her employer told her that the company would give her a monthly pension of $1,570 for retirement. But if either Cindy or her husband, Fred, passed away, the surviving spouse would receive a reduced payment of just $785 per month. Cindy is a decade younger than Fred, so she knew there was a real possibility she could live many years after his passing.

The benefits counselor also told Cindy that she could take a one-time lump payment of $252,800 instead of the monthly pension if she wanted.

Cindy reached out to her Bank On Yourself Professional, Julie, and asked, “Can you do better than $1,570 now, and only $785 – just 50% of the initial benefit – for whichever of us survives the other?”

Julie looked at annuities from many top-rated companies and found the perfect retirement annuity for Cindy and Fred: a fixed indexed annuity with a lifetime income rider that will pay them almost $1,900 per month, as long as either one of them is living. That means the surviving spouse will receive the full $1,900 each month for life.

Cindy decided to take the lump sum payout from her employer now and use it to purchase the deferred fixed indexed annuity with a lifetime income rider that Julie recommended. She and Fred are looking forward to the monthly checks they’ll start receiving when they turn on their lifetime income in a few years.

Of course, your situation is unique. But that doesn’t mean you can’t take advantage of retirement income planning to develop a safe money strategy that will guarantee you have all the funds you need for comfort in your golden years. There are specialists that can help you create a tailored retirement strategy that fits your situation.

And your consultation is free, with no obligation!

How a Bank On Yourself Professional Can Help You Create A Safe Money, Guaranteed Income Retirement Program

Holder of the Nobel Memorial Prize in Economic Sciences, Richard Thaler, says…

For many people, being asked to solve their own retirement savings problems is like being asked to build their own cars.”

You don’t have to build your own car! The Bank On Yourself Professionals are experts in safe-money strategies, including annuities and high cash value dividend-paying whole life insurance policies (known as the Bank On Yourself-type policies). There are only about 200 financial representatives in the entire US and Canada who have passed the rigorous training and requirements to be designated Bank On Yourself Professionals. Their safe-money strategies can help you reach your short- and long-term financial goals and dreams while letting you sleep soundly at night.

A Bank On Yourself Professional can help you sort through the various retirement annuities and enhancements and analyze whether you would benefit by adding an annuity to your financial plan. As they look at your unique situation, they can identify the combination of safe money strategies best suited for you. Bank On Yourself Professionals work with more than 40 top-rated, financially strong life insurance and annuity companies. All told, they have hundreds of different annuities and life insurance policies to choose from.

You can arrange for a free consultation with a knowledgeable Professional to discuss if this safe wealth-building strategy makes sense for your situation.

There’s no cost or obligation so request a FREE Consultation here now, and you’ll be referred to a Bank On Yourself Professional who will arrange a time to speak with you to discuss your specific situation. They will help you identify your primary short-term and long-term financial goals and the best way to reach them without taking any unnecessary risks.

*Name and nonessential details changed to protect the identities of real people. However, this story is based on a real experience of a Bank On Yourself client who built her retirement nest by trading her pension for a deferred income annuity with a lifetime income rider.

7 Ways to Catch Up if You’re Late on Retirement Savings

Experts like Fidelity Investments recommend you save at least 10 times your salary by your 67th birthday if you want to have a comfortable retirement. Supplemented with Social Security, this may be enough to cover your expenses through an average life expectancy.

Those numbers account for increasing income and compound interest as you age. An on-time retirement savings looks like this:

  • 1x your salary saved by age 30
  • 3x your salary saved by age 40
  • 6x your salary saved by age 60
  • 10x your salary saved by age 67

If you’re on track, fantastic. If you’re late, you have some catching up to do.  If you haven’t set up a personal budget, make that the first thing you do. Once that’s in order, you’ll be able to implement the strategies below to get ready for your golden years…

1. Adjust Your Retirement Age

If you’re behind on retirement savings, you might need to delay your retirement date. “Full Retirement Age (FRA)” is the term used by Social Security to define when you can begin collecting your full retirement benefits. As of 2020, that age is:

  • 67 for people born in 1960 or after
  • 66 for people born between 1943 and 1954
  • 66 plus two to 10 months for those born between 1955 and 1959

If you claim your benefits after your FRA, they increase by 8% per year you put off retirement until your 70th birthday. If you start claiming benefits after 70, your Social Security benefits don’t increase.

Each year you stay at work and put off claiming your benefits, you increase your retirement funds in two ways: You save more money from your employment income, and your Social Security check grows.

2. Find Extra Money

Most people fall behind on their retirement savings because their income is too close to their expenses. You have a variety of options for increasing your income, including:

  • Retraining or going to school so you can qualify for a better job
  • Working with your employer for growth and promotion opportunities
  • Looking for a new employer who pays better
  • Taking on part-time work outside your regular job
  • Working a side gig like Uber driving, house-sitting, or dog-walking
  • Starting a part-time small business

You can also earn extra money in a short burst or one-time effort. Use this cash infusion to start your retirement fund or pay off high-interest debt so you can start strong in your retirement savings efforts. Some techniques for this include:

  • Holding a garage sale to declutter the house and make some extra money
  • Selling unused furniture, books, and electronics online
  • Working overtime when it’s available

In both cases, more money brought in means more money to save for retirement. Just make sure you don’t give in to temptation and splurge when you get the extra cash.

3. Start Downsizing Now

When you retire, you’re going to downsize. You’ll spend less on gas and business clothes and probably eat out less often. You might move into a smaller home or get rid of a family car. Your expense base will be lower with your new lifestyle.

Some of that downsizing won’t impact your quality of life if you do them right now, and each item will increase how much you can save toward retirement.

Start by identifying the things you will do during retirement to cut costs. Then, identify the ones you can implement before you retire. Set a schedule, then make it happen.

4. Automate Your Savings

You probably have heard the phrase “pay yourself first.” It’s good advice but sometimes hard to wrap your head around. Here’s how it works.

Most people have the following process for saving money:

  1. Get paid.
  2. Spend money.
  3. Save what’s left just before the next payday.

When you pay yourself first, you use this process:

  1. Get paid.
  2. Save the money you want to save.
  3. Get by for the rest of the pay period on what’s left.

The second method prioritizes savings and long-term financial health and helps you stick to a budget. It prevents you from splurging simply because there’s money in your checking account.

Take this one step further by automating your savings. Some employers allow you to do this as part of your direct deposit. If yours doesn’t, you can set up an automatic transfer on payday or the day after through your bank. Either way, it sets a hard limit on your spending by putting retirement savings first.

5. Follow the 50/50 Rule

The 50/50 rule is a simple way of handling money that comes in above your regular income for a month. Examples include overtime pay, bonuses from work, tax refunds, and the proceeds from selling that old couch.

Whenever you get extra money, save half of it immediately. The other half you can spend as you like. This allows you to treat yourself from time to time while still making extra progress toward your long-term financial goals.

Bonus points if you also apply this rule to any increases in your regular income. For the next raise you get, put half of that additional income toward automated savings. The rest you can use to enhance your lifestyle.

If you’re far behind on retirement progress, you might want to change this to a 75/25 rule or even a 90/10 rule.

6. Do a Savings Challenge

If you search for “savings challenge” online, you’ll find dozens of options. Each is a unique, gamified way to make progress toward financial goals. A few popular examples include:

  • The 52-week challenge, where you save $1 on the first week of the year and increase it by $1 each week until you save $52 on the last week of the year.
  • The no-spend challenge, where you commit to spend no extra money for a set period of time. Done regularly, it can add up to serious savings.
  • The $1 challenge, where at the end of each day, you put any remaining dollar bills into a savings jar.

You can find all kinds of variations on these challenges with a quick search. Pick the one you like best, then take it on.

Read “How the 10/10/10 Formula of Savings Rescues Overstretched Family Budgets”

7. Reprioritize

When many people think they don’t have money to save toward retirement, what they mean is they’re prioritizing more immediate spending over preparing to retire. This is fine when those priorities are food, shelter, and medical care. It’s less acceptable when they’re fancy coffee or compulsive online shopping.

Read “Conscious Spending: How to Live a Richer Lifestyle Without Busting Your Budget”

Spend some time looking over your expenses and find the things that aren’t as important as a healthy, comfortable retirement. Use that to tighten your budget and get started toward building the savings you need.

Final Thought

It can be daunting to look at this whole list. That’s a lot to do, and some of it might be out of your reach at the moment. Don’t worry about that. Instead, focus on one item. Make it either the easiest one for you to do or the one you think will make the most significant difference.

Once you have that well in hand and your monthly cash flow has adjusted to it, take on another. Keep doing that until you have all 7 in place. If you do one a month, you’ll get them all set up in just over half a year.

Stephen McWinter is a financial journalist in Tampa Bay, FL, who writes about retirement strategies.

How to Avoid Depleting Your Retirement Nest Egg

The #1 retirement fear of Americans is running out of money. AARP reports that 50% of Americans share that fear.

And with good reason, because the average 65-year-old (the average retirement age in the US is 61) will outlive his or her savings by almost a decade, according to the World Economic Forum. Unfortunately, many will be forced to choose between putting food on the table or paying for life-saving medicine and may end up being dependent on their children.

We spend our working years hustling to build up our retirement nest egg. We assume that when we retire, we’ll supplement Social Security by withdrawing some of the principal. But no one can give us surefire guidance on how much we can safely take from our nest egg each year. In fact, William Sharpe, winner of the 1990 Nobel Prize in Economic Sciences, said retirement income planning is “the hardest and nastiest problem in finance.”

How long will your money last in retirement?

Perhaps you’ve heard that you’ll be safe if you withdraw 4% or 5% of your savings each year, adjusted for inflation. But many experts now recommend a maximum annual withdrawal of 3%. One financial writer even said, “There are so many variables that it is impossible to calculate a bulletproof withdrawal rate rule – unless that rate is 0%.”

Creating a bulletproof retirement fund distribution plan is not as simple as following some arbitrary percentage rate. And blindly following that advice will not only put your retirement nest egg in jeopardy but make some of your biggest retirement fears come to life.

Growing Your Money Safely and Creating an Income You Won’t Outlive

Thankfully, there’s a solution that addresses all these concerns.

Generations ago, financial whizzes created a specific financial vehicle to ensure your money lasts as long as you do. It’s the vehicle recommended today by the Center for Retirement Research at Boston College and other experts.

This financial vehicle is called a retirement annuity. Because it’s designed to guarantee you an income no matter how long you live, and regardless of what’s happening in the stock market or the economy, the Wall Street Journal calls annuities…

Please email me my
Consumer Guide to a Guaranteed Lifetime Income!

Get Your FREE Report!


“A Retirement Account with Airbags”

Retirement savings expert Kimberly Langford, writing for AARP, says:

“One of the most significant risks in retirement is outliving your savings. You can save carefully through the years, but there’s a big unknown when you start to withdraw the money: You don’t know how long your savings need to last because you don’t know how long you’ll live.

“An income annuity can guarantee that you’ll receive a check every month for the rest of your life. An annuity can help supplement other sources of guaranteed income, such as Social Security. It can be especially valuable if you don’t have a pension. Annuities also help to protect you against stock market turmoil. Your payouts will continue no matter what happens in the stock market or how long you live.”

And according to J. Mark Iwry, Treasury Department Deputy Assistant Secretary for Retirement and Health Policy from 2009 to 2017…

Annuities can help retirees protect themselves from outliving their savings.”

Frank O’Connor, vice president of the Insured Retirement Institute, agrees. “An annuity is the only financial product that can generate income that will last as long as someone may live, whether that’s to age 80, 90, 100, or 110.”

And modern retirement annuities have great flexibility, allowing you to adapt to unforeseen events while still guaranteeing you an income for life. If you choose, you can specify income that will last as long as either you or your spouse or significant other may live.

Please email me my
Consumer Guide to a Guaranteed Lifetime Income!

Get Your FREE Report!


Is an Annuity to Protect Your Retirement Nest Egg Right for You?

Annuities are very versatile, but an annuity may not be right for everyone. Annuities are for people who want guaranteed monthly income throughout retirement. The age at which people typically start an annuity is between 40 and 90. And setting up a retirement annuity is probably easier than you think.

A Bank On Yourself Professional can help you sort through the various annuities and enhancements and analyze whether you could benefit by adding an annuity to your retirement financial plan. As they look at your unique situation, they can identify the combination of safe money strategies best suited for building your nest egg safely and predictably. Bank On Yourself Professionals work with more than 40 top-rated, financially strong life insurance and annuity companies. All told, they have hundreds of different annuities and guaranteed financial strategies to choose from.

Ready to start protecting your retirement and ensure your money lasts as long as you do? Request a FREE Consultation here now, and you’ll be referred to a Bank On Yourself Professional who will arrange a time to speak with you to discuss your specific situation. They’ll help you identify your primary short-term and long-term financial goals and the best way to reach them without taking any unnecessary risks. The consultation is free and there’s no obligation.

You’ve worked hard building your nest egg for retirement. Now is the time to protect it. Request a free consultation with a knowledgeable Bank On Yourself Professional here today:

Retirement Plan Unpredictability is a Major Wealth Killer

I have written at length about my research into the wealth-killing traps of 401(k)s, IRAs, 403(b)s, and Roth plans… and how to avoid them.

In this post, I’m going to talk about the trap of retirement plan unpredictability, and I’ll start by asking you a critical question:

Do you know what the value of your retirement account(s) will be on the day you plan to tap into them… and in 20 or 30 years?

If your answer to that question is “no,” then you don’t have a plan – you’re gambling.

Yet isn’t the money you’ve earmarked for retirement money you can’t afford to lose? On top of all of life’s stresses, do you really want to have to worry about when the next market crash could wipe out 50% or more of your life’s savings – as has happened twice just since the year 2000?

Market Volatility Has Proven to be a Cause of Health Problems and Even Early Death

[Read more…] “Retirement Plan Unpredictability is a Major Wealth Killer”

Tax Deferral is a Scam and Here’s Proof

Tax deferral is a con, and I’m going to prove it to you.

Actually, I’m going to let you prove it to yourself, with this 5-second experiment.

The conventional wisdom says, “Maximize your contributions to tax-deferred plans, like 401(k)s, IRAs and 403(b)s. Your money compounds without being reduced by taxes, and you’ll end up with more money during retirement.”

But is it really true?

The Society of Actuaries says that if the tax rates are the same, “It doesn’t make any difference whether [the taxes] are taken away from you at the beginning (tax-exempt) or at the end (tax-deferred). It’s the same fraction of your money that is left to you.”

But most people look at their savings and think it’s all theirs. You may have forgotten you’ll owe the IRS the taxes you deferred all those years – on every penny you’ve put in and every penny of growth.

If the tax rates miraculously manage to be lower during your retirement, you might come out ahead by deferring your taxes. But where do you think tax rates are headed long term? You must consider what tax rates might be during a retirement that could last 30+ years. [Read more…] “Tax Deferral is a Scam and Here’s Proof”

When Does Taxation Become Theft?

In his first 100 days in office, President Biden unveiled three colossal spending packages earning him the nickname, “The Six Trillion Dollar Man.”

Biden and Congress are just getting started with the most massive expansion of government since FDR’s New Deal during the Great Depression. Apparently, it’s desperately needed, even though the pandemic-caused recession is over.

This is a government that is notorious for wasting hundreds of billions of our hard-earned dollars every year. Think $518,000 to study how cocaine affects the mating habits of Japanese quails, $998,798 to ship two 19-cent washers from one state to another… and the list goes on. You couldn’t make this stuff up if you tried!

And let’s not forget this is a government with a long history of not being able to make much of a dent in controlling fraud and abuse. The government admits that more than $134 billion of improper Medicare and Medicaid payments were made in 2020 alone – and that’s just one government agency. [Read more…] “When Does Taxation Become Theft?”

6 Ways to Protect Yourself from Taxmageddon

Updated April, 2021

Federal debt now exceeds the size of the entire U.S. economy. And it’s growing at a rate that will make your head spin, as a quick glance at the U.S. Debt Clock reveals:

The Congressional Budget Office (CBO) says this deserves attention because…

Americans will be paying for this for decades.”

Passing the $1.9 trillion COVID relief bill was just for openers.

Now President Biden is planning the first major federal tax hike in nearly 3 decades to pay for an even bigger initiative. There’s more in the works, too, to fund everything from infrastructure, climate initiatives, and programs for poorer Americans… to canceling student loan debt (which alone would add hundreds of billions of dollars to our already-skyrocketing national debt).

Which Means that Higher Taxes are Inevitable and You Must Take Action TODAY to Protect Yourself from Taxmageddon!

There are little-known, but legal ways to protect yourself from this tax tsunami, under current tax law. This article explains what you need to do today to shield yourself from some very unpleasant tax surprises down the road.

(Download a FREE Special Report that Reveals How to Bypass Banks and Wall Street, Gain Control of Your Money and Shield Yourself from Taxmageddon) [Read more…] “6 Ways to Protect Yourself from Taxmageddon”

How to Trade In Your 401(k) for an Increasing Guaranteed Income for Life

Jason is 53 years old and just changed jobs. He’s facing two retirement planning dilemmas…

  1. He has $830,000 in his 401(k) from his previous job and wants to move it where it gives him more guarantees that he and his wife, Julie, won’t outlive their money in retirement.
  2. He had been putting $19,000 a year into his old 401(k) and wants to continue socking away that much. But in the last couple of years he experienced several downsides to 401(k)s that have soured him on the idea of continuing down that path.

The Five 401(k) Drawbacks Jason Discovered…

Drawback #1: When the pandemic hit, Jason’s employer stopped doing any matching contributions, which had been a big incentive for him. He’d forgotten the employer match isn’t guaranteed.

Drawback #2: As Jason gets closer to retiring, he has much less of an appetite for risk and volatility. What if the market crashes again shortly before he plans to retire in 14 years at age 67?

He’d been saving diligently in a 401(k) for 29 years already, and his average annual return had been less than 6%! Sheesh! All those sleepless nights and heart-stopping crashes… for less than 6% a year?!? He wondered if a monkey throwing darts couldn’t have done better than that… [Read more…] “How to Trade In Your 401(k) for an Increasing Guaranteed Income for Life”

A Surprising Solution to the 15-Year vs 30-Year Mortgage Dilemma

Jon and Jen have an opportunity to buy their dream home and lock in a historically low interest rate. This is a pretty common scenario in today’s market. In fact, you may be thinking about buying a home or refinancing your mortgage to take advantage of today’s low rates. If so, here’s a powerful option to consider…

Jon and Jen are trying to decide whether a 30-year mortgage or a 15-year mortgage makes the most sense. Their mortgage broker showed them that even with an interest rate just 0.65% lower, the 15-year mortgage would save them almost two-thirds of the interest of a 30-year loan.

They decided the 15-year mortgage made the most sense. Their thinking was, “We’re both 48 now, and we plan to work until we’re 70. The sooner we get the house paid off, the sooner we can save more for the future. Plus, we really like the idea of saving almost $90,000 in interest.” [Read more…] “A Surprising Solution to the 15-Year vs 30-Year Mortgage Dilemma”

How to Never Run Out of Money in Retirement – the Solution Top Experts Recommend

Would it surprise you to know that the #1 retirement fear is running out of money – a fear shared by fully half of Americans? That’s according to a recent study by the Aegon Center for Longevity.

People are deathly afraid of running out of money in retirement for good reason, experts say…

Over the last 40 years, there has been a dramatic shift away from company pension plans that promised workers a certain amount of money every month in retirement for as long as they lived.

Instead, there’s been a seismic shift toward do-it-yourself, cross-your-fingers, hope-and-pray retirement planning strategies like 401(k)s and IRAs. [Read more…] “How to Never Run Out of Money in Retirement – the Solution Top Experts Recommend”