Why is the “Father of the 401(k)” Now Putting His Money into Bank On Yourself Instead?

It caused quite a stir when the man who is credited with being the “father of the 401(k),” Ted Benna, recently announced that he’s put a substantial part of his own money – “probably the biggest part of my wealth” – into what is most commonly known as a Bank On Yourself plan.

You see, for at least six years now, Benna has been calling the 401(k) a “monster” that “should be blown up.”

Benna is credited with finding a way to capitalize on the tax code to create a way for working men and women to supplement the pension plans that many workers used to have. Those pensions plans have been disappearing, and 401(k)s were created to hopefully help pick up the slack.

But over the years, Benna watched Wall Street and Big Business pervert the 401(k) in ways he couldn’t possibly predict.

In a recent interview, Ted Benna discussed three reasons why we should be very leery of 401(k)s and IRAs:

  • The government may repeal the 401(k) and IRA, so you won’t be able to put any more money pre-tax into these accounts, or the amount you can put in will be drastically reduced (Congress considered doing that again last year!)
  • Benna believes the next stock and bond market crash is imminent and could wipe out 40% of the typical portfolio
  • Wall Street has hijacked these plans, and the excessive fees charged by mutual fund companies and plan administrators are robbing you of up to half of your nest egg

I’ve Been Sounding the Alarm About 401(k)s and IRAs for Even Longer than Benna

And I’ve been attacked ruthlessly for that by the Wall Street fat cats who always get paid – whether we win or lose.

But the real story here is Benna’s admission that he has, in his words, “put most of my money” into the high cash value, dividend-paying whole life policies most commonly known as Bank On Yourself-type plans.

Benna says these plans avoid the dangers that traditional retirement plan accounts face. Another reason he likes this type of plan is because of its tax advantages.

If you’re interested in the back story of how Ted Benna came to reveal all of this in an interview, read my blog post about the “501(k) plan”.

I think you’ll also find this article, 6 Reasons Your 401(k) is a Scam, eye-opening.

Ignore the Warnings About the 401(k) at Your Own Peril

Wall Street has been extremely successful at getting us to buy into 401(k)s, IRAs and similar government-sponsored retirement accounts lock, stock and barrel. Most people have little or no savings outside of these vehicles, according to the Federal Reserve Survey of Consumer Finances.

But the chorus of experts warning of the dangers of 401(k)s and IRAs keeps growing.

Don’t put your head in the sand – find out TODAY how the Bank On Yourself concept can bring true lifetime financial security to you and your family. Just request your FREE Analysis here, if you haven’t already.

Do it right now, while you’re thinking about it. Don’t make the mistake of waiting until it’s too late.

7 Warning Flags and Financial Risk Factors We Face Today

You know people have gotten too complacent about investing in the stock market and what it takes to grow real wealth when…

  1. People bragging about becoming 401(k) millionaires and posting their balances on social media has become a “thing” (remember when everyone from the company executives to the janitor were bragging at the water cooler about being real estate millionaires, just before the last crash?)
  2. People start to think they can actually retire comfortably on $1,000,000 (you can’t, because the IRS will take at least 25% – 33% off the top, and you’ll need $500,000 just to cover out-of-pocket healthcare and long-term care costs in retirement)
  3. The personal savings rate fell to its third-lowest on record at the end of 2017
  4. Consumer spending is rising, and more of it is being fueled by debt (the last quarter registered the second-largest percentage increase in charge-card debt in a decade)
  5. Inflation is taking a bigger bite out of Americans’ paychecks (real average hourly earnings of 80% of employees fell by half a percent in January – its fifth decline in six months)
  6. Hundreds of major companies have price earnings ratios that are higher than during the height of the 2000 and 2007 bubbles
  7. For a decade now, central banks have pretended they can print up prosperity (which they’ve done at a magnitude beyond imagination… and we’re supposed to have blind faith that they know what they’re doing)

[Read more…] “7 Warning Flags and Financial Risk Factors We Face Today”

The Stock Market Never Goes Down Any More? (Really?!?)

What was until recently an unloved bull market has now reached the point of “euphoria,” and investors are “having a hard time imagining a decline,” according to Morgan Stanley.

After all, what’s not to love about a bull market that has only two directions – up… and up faster?

It’s being called a “market melt-up,” and the main fear people now have is of missing out.

Those caught up in the euphoria – and the fear of missing out – might want to consider the following:

  • The S&P 500 is trading at 2.3 times its companies’ sales – a smidgen below its dot-com peak
  • Price-earnings ratios have only been higher for 1% of the stock index’s history
  • The cyclically adjusted price-earnings ratio is higher than before the crash of 1929, and higher than at any moment in history except right before the dot-com crash

Those of us who experienced the pain of the dot-com meltdown in 2002 and the financial crash of 2008 hope that the market will never become that irrationally exuberant again.

Back then, people justified their exuberance with the mantra that “this time it’s different.” [Read more…] “The Stock Market Never Goes Down Any More? (Really?!?)”

Why You’ll Need $500,000+ in Retirement for Medical Expenses Alone

Retirees spend more than a third of their Social Security benefits on out-of-pocket medical costs, on average, according to a new study by the Center for Retirement Research at Boston College.

Even after factoring in other sources of income, medical spending still took a huge bite – 18% – of seniors’ total retirement income.

A 65-year-old couple retiring now will need $275,000 to cover out-of-pocket health care costs during retirement, according to a study by Fidelity.

The news gets even worse, however, because these numbers do not include the cost of nursing home or home health care.

That can range from $40,000 a year for home health aides… to over $85,000 a year for a semi-private room in a nursing home, according to the Genworth 2017 Annual Cost of Care Survey: Costs Continue to Rise Across All Care Settings. And if you prefer a private nursing care room, you’ll have to cough up almost $100,000 a year.

Ignore the likelihood of needing long-term care services at your own peril: At least 70% of people over age 65 will require long-term care services, and more than 40% will need nursing home care, according to the U.S. Department of Health and Human Services.

Based on the average cost of a nursing home room and the average length of stay – which is 2.8 years – you would need over $250,000 to cover a single stay. [Read more…] “Why You’ll Need $500,000+ in Retirement for Medical Expenses Alone”

Savings Rate Falls to 10-Year Low

Americans are saving much less and spending more – even though their real disposable incomes are unchanged.

The savings rate just fell to a 10-year low of 3.1%, according to the Commerce Department.

What’s most worrisome to economists is that savings rates below 4% occurred before the last two major market crashes, as people felt what turned out to be a false sense of security, due to rising stock prices and/or home values.

Looks like it’s déjà vu all over again…

I recently wrote how the current bull market is the second longest in modern history. If it manages to last until summer, it will become the longest-running bull market at 9½ years.

A bull market has never made it to its 10th birthday.

In addition, historically, the longer a bull market lasts, the harder and deeper it crashes.

Which indicates the optimism that’s caused Americans to save less and spend more is misplaced. And, to take a line from the movie Grease, that means a lot of people are cruisin’ for a bruisin’.

The vast majority of Americans have little or no savings outside their retirement accounts, according to the latest Federal Reserve Survey of Consumer Finances. [Read more…] “Savings Rate Falls to 10-Year Low”

Federal Reserve Survey: Your 401(k) and IRA Won't Give You a Decent Retirement

If you’re counting on your 401(k) or IRA for retirement income, I have some bad news for you…

A new analysis of the Federal Reserve’s latest Survey of Consumer Finances by the Center for Retirement Research demonstrates that 401(k) plans are destined to fail millions of Americans.

The Federal Reserve survey is updated every three years, and the latest one reveals that, in spite of the long-running bull market and an improving economy … the typical couple nearing retirement will only receive $600 per month from their 401(k)s and IRAs combined.

That $600 a month is not indexed for inflation, so its purchasing power will decline over time.

And that $600 a month is likely to be the only source of income people will have to supplement Social Security because the typical household has virtually no other savings outside of its 401(k) and IRAs.

The Retirement Savings Shortfall News is Even Worse for Younger Workers with 401(k)s

[Read more…] “Federal Reserve Survey: Your 401(k) and IRA Won't Give You a Decent Retirement”

Older Folks Say it's Not Fun Getting Old When You're Worried About Running Out Of Money

Record numbers of Americans older than 65 are working today, and millions are doing it by need, not by choice.

Too often, the work these folks find involves back-breaking, menial labor.

Many people are entering their golden years with alarmingly fragile finances, according to a recent article in The Washington Post.

And polls routinely show that most older people are more worried about running out of money than they are of dying. They lament it’s not fun getting old.

Thanks to a massive shift from guaranteed lifetime pensions to you’re-on-your-own-good-luck-with-that 401(k)s and IRAs…

People are forced to guess how long they might live and budget accordingly, knowing that one big health problem or a year in a nursing home could wipe it all out.”

[Read more…] “Older Folks Say it's Not Fun Getting Old When You're Worried About Running Out Of Money”

Stock Market Reaches New Highs – Do You Trust It?

When we released our Stock Market Survey a few weeks back, we were surprised so many readers responded. We were even more surprised by the results of the Survey, which we promised to share with you, so read on…

Nearly half (45%) of those who took the survey said, “I don’t trust the market with money I can’t afford to lose.” They clearly understand that the money they’re setting aside for something as important as retirement or a college education is money you really can’t afford to lose.

Fully 45% of our subscribers believe a major market crash – a plunge of 50% or more, as we had in 2000 and again in 2008 – is imminent. And another 34% expect that calamity to happen in the next 3-5 years.

But when we brought the situation closer to home and asked readers how a severe market crash would affect them personally, we found wave after wave of denial.

About 12% said that even if the market drops by 50%, “I have plenty of time to recover.” I suspect these folks don’t realize that since 1929, we’ve had three market crashes where the Dow took between 16 to 25 years to recover. What if history repeats itself? [Read more…] “Stock Market Reaches New Highs – Do You Trust It?”

The Surprising Truth About What Happens to the Cash Value of Your Life Insurance Policy When You Die

In Part 1 of this two-part series, I proved the media’s financial gurus are wrong when they claim that it takes years to build cash value in a whole life insurance policy.

In this second part of the series, I’ll show you why all the self-proclaimed experts miss the boat when they claim that whole life insurance policies are a rip-off because you build up all that cash value, then the insurance company keeps it when you die and only gives your heirs the death benefit.

It doesn’t have to be that way, my friend!

Click on the policy statement above to see a larger version

Here’s an actual whole life insurance policy annual statement. (This is a different policy than the one I showed you in Part 1.)

Click on the image to open as a pdf

This is a whole life insurance policy purchased on my life in 1992. The statement I’m showing you, issued 17 years later, makes some astounding revelations. [Read more…] “The Surprising Truth About What Happens to the Cash Value of Your Life Insurance Policy When You Die”

Here’s Proof That the Financial “Experts” Don’t Know About Bank On Yourself Whole Life Insurance Policies

Policy Statement Showing How Whole Life Policies Designed the Bank On Yourself Way are Different From the Policies Most Financial "Gurus" Talk About
Click on the policy statement above to see a larger version

Take a look at this life insurance policy statement. It’s for a policy I took out on September 15, 2002. I’m showing it to you because I want put to rest the misconceptions and untruths the so-called financial “gurus” are spreading about the cash value growth of well-designed dividend-paying whole life insurance policies.

Policy Statement Showing How Whole Life Policies Designed the Bank On Yourself Way are Different From the Policies Most Financial "Gurus" Talk About
Click on the image to open as a pdf

The financial gurus tell you not to buy whole life insurance because your equity in the policy—your cash value—grows too slowly, and you won’t have any equity for the first few years.

This is simply not true of Bank On Yourself-type whole life insurance policies!

You’ll have cash value in the first year with a whole life insurance policy designed the Bank On Yourself way!

[Read more…] “Here’s Proof That the Financial “Experts” Don’t Know About Bank On Yourself Whole Life Insurance Policies”