Coronavirus Pandemic Exposes Cracks in 401(k) Plans

I’ve written extensively about why more and more experts are warning that the 401(k) is an experiment that’s failed, and why the man considered to be the “father” of the 401(k) says it’s a monster that should be destroyed.

But the pandemic, shutdown and resulting economic downturn have exposed dangerous cracks in the 401(k) system. I’ll explain three of them here and show you how to protect yourself…

New 401(k) Problem #1: Companies are Suspending Matching Contributions

Tens of millions of workers have already been affected, and more companies have announced their plans to suspend the 401(k) match.

That’s a real blow for employees who’ve come to think of the match as “free money” and assumed it’s a perk that won’t be yanked with little warning.

But the reality is that the employer match isn’t really “free money” at all. According to a study by the Center for Retirement Research, for every dollar an employer contributes to your 401(k) match, they pay 90 cents less in salary to men and 99 cents less to women!

Translation: For every matching dollar you’re given, you really only receive 10 cents or less in total compensation. [Read more…] “Coronavirus Pandemic Exposes Cracks in 401(k) Plans”

How to Be Financially Prepared for Any Emergency or Black Swan Event

By definition, an “emergency” is an unexpected and difficult or dangerous situation which happens suddenly and requires quick action to deal with it.

The unexpected doesn’t wait around for you to get your act together. But does that mean you can’t be prepared for an emergency… even one as devastating as the coronavirus pandemic and lockdown?

Are you willing to play a little game of the imagination and find out?

What if you were forewarned two years ago that in March of 2020…

  • We’d be in the grips of a pandemic and there would be a shutdown of virtually the entire economy
  • Tens of millions of people would lose their jobs and you could be one of them. And many others would have their hours and pay cut
  • The government would step in and provide stimulus, but it could take a month or two or more until you receive it
  • Your charge card limits could be reduced or even canceled without warning
  • Stock market volatility would return with a vengeance and your plans for retirement could be upended for years or even a decade to come
  • People of any age could be debilitated or even die after being infected with the virus

If You Had Been Warned of This Two Years Ago, What Would You Have Done Differently?

[Read more…] “How to Be Financially Prepared for Any Emergency or Black Swan Event”

How to Avoid the Pitfalls of 401(k)s and IRAs: Pamela Yellen’s Interview on Beyond 50 Radio

I was just interviewed on Beyond 50 Radio about the wealth-killing traps of 401(k)s and IRAs and how to avoid them.

When you listen to the replay of this interview by clicking on the play arrow below, you’ll discover:

  • How the pandemic has exposed the shortcomings of traditional retirement accounts
  • Why the 401(k) employer match isn’t really “free money” at all
  • Why you should never let your employer choose where to invest your 401(k) contribution – most employers now automatically invest your money, and almost no one questions it!
  • Why you’re likely to retire in the highest tax brackets of your life – and how to legally slash your tax bill
  • How the fees hidden in 401(k)s can devour 40% or more of your hard-earned money
  • The critical difference between saving and investing for retirement
  • Why you need an emergency fund equal to two years of your household expenses
  • How to have quick and easy access to the money you need to weather the challenges life unexpectedly throws at you – and how you can get the exact same growth on that money as though you never touched it
  • The real reason many financial representatives will steer you away from the Bank On Yourself strategy
  • What the Bank On Yourself strategy is in a nutshell

You can listen to the interview by pressing the play arrow below…

[Read more…] “How to Avoid the Pitfalls of 401(k)s and IRAs: Pamela Yellen’s Interview on Beyond 50 Radio”

Bank On Yourself – a Financial Bunker for Scary Times

These are unprecedented times we find ourselves in, and there is no historical playbook for navigating them.

The Coronavirus has turned the financial markets upside down, and the experts are bemoaning the fact that there’s “been no place to hide,” including the traditional “safe havens.”

However, none of the hundreds of thousands of people who use the Bank On Yourself strategy lost a penny as the markets careened out of control. Their plans haven’t skipped a beat and continue growing by a guaranteed, predictable amount, just as has happened every year for the last two centuries.

Their annual increases are guaranteed to get larger every year, and all of their principal and ALL of the gains they have ever received are locked in. These plans do not go backward.

They also have access to the equity in their plans to help them weather the extraordinary challenges they face today – with no restrictions, no penalties, no taxes due… and no questions asked!

Let’s take a look at three ways Bank On Yourself is your best financial bunker in scary times:

Bank On Yourself Has a 200-Year Track Record of Positive, Guaranteed, Competitive Growth

[Read more…] “Bank On Yourself – a Financial Bunker for Scary Times”

Are You Cruisin’ for a Bruisin’? Americans Are Spending Money They Don’t Have and Hitting Record Debt Levels

Total U.S. household debt just surpassed $14 trillion for the first time ever, and credit card debt hit a new record, as well. These scary debt stats come from the latest report from the Federal Reserve Bank of New York.

As economist Heather Boushey noted… “In the abstract, more debt signals optimism. But in reality, families are using debt as a mechanism to pay for things their incomes don’t support.”

The optimism comes in because the stock market can’t seem to stop hitting new records, and the economy is prospering, so it’s time to spend, spend, spend – even if it’s money you don’t have.

Then the reality sets in as 8.36% of credit cards are now delinquent. Almost 5% of auto loans are at least 90 days overdue. And at least 12% of student loan borrowers are delinquent or in default.

For the moment, let’s ignore the fact that most people have forgotten that the balances in your market-based retirement accounts are “paper” – not “real” – wealth which will vanish with the next market crash.

Let’s focus instead on the lessons most people have forgotten from the last debt crisis. Americans were feeling flush from rising stock market and real estate values, and they were in hock up to their eyeballs.

Then the Bubbles Burst and…

[Read more…] “Are You Cruisin’ for a Bruisin’? Americans Are Spending Money They Don’t Have and Hitting Record Debt Levels”

The New “Magic Retirement Savings Number”: $3 Million or More

If you’re like a lot of people, you may have a goal of saving $1 million for retirement.

After all, that would make you a “millionaire” and should give you a comfortable retirement lifestyle, right?

Not so fast, according to a number of retirement planning experts cited in an article last month in Fortune magazine.

It’s time for a dose of reality, the experts say: You now need to save $3 million – or more – to enjoy a decent retirement lifestyle.

Here Are 3 Reasons Why $3 Million is the New $1 Million When it Comes to Saving for Retirement…

Reason #1: That $1 million number was never adjusted for inflation or corrected for today’s low-interest-rate environment.

[Read more…] “The New “Magic Retirement Savings Number”: $3 Million or More”

Case Study: Enjoy a Guaranteed Lifetime Income and Reduce Your Taxes in Retirement

Tom Justice is a 59-year-old chemical engineer who has three major concerns about his retirement plan…

His first concern is about outliving his retirement savings

He’s read the statistics and knows that in spite of experiencing the longest bull market in history, the average 65-year-old will outlive their savings by almost a decade, according to the World Economic Forum.

Tom doesn’t have anywhere near the amount of savings recommended by many experts. According to the “Rule of 25,” you should have 25 times your total annual expenses saved by the time you retire if you don’t want to run out money.

Tom wants to live on at least $100,000 a year, which means he needs at least $2.5 million saved up. And that’s a far cry from the $750,000 he’s managed to save in his 401(k)… and it’s all invested in a stock market that he knows is past due for a major market crash.

Tom’s second concern is he believes tax rates can only go up over the long term

[Read more…] “Case Study: Enjoy a Guaranteed Lifetime Income and Reduce Your Taxes in Retirement”

Pros, Cons and Why the SECURE Act WON’T Make Your Retirement More Secure

The SECURE Act of 2019 is supposed to help more Americans save for retirement. The new legislation will have an impact on retirement plans – and not all of them are good.

In December of 2019, Congress passed H.R.1994 – the SECURE Act of 2019 – which contains the most sweeping changes to government-controlled retirement accounts – such as 401(k)s, 403(b)s, and IRAs – in more than a decade.

The SECURE legislation – which stands for “Setting Every Community Up for Retirement Enhancement” – put into place several provisions supposedly intended to strengthen retirement security.

Not surprisingly, the financial services industry spent many millions of dollars lobbying Congress to ensure passage.

So is the new legislation in your best interests? Is the SECURE Act really likely to increase your retirement security?

[Read more…] “Pros, Cons and Why the SECURE Act WON’T Make Your Retirement More Secure”

Four Helpful Tips for Keeping New Year’s Resolutions to Spend Less and Save More

It probably won’t come as a surprise that the two most common New Year’s financial resolutions are to save more money… and to spend less.

And it also should come as no surprise that most New Year’s resolutions have been abandoned by Valentine’s Day – if not sooner!

So I thought this would be a great time to give you some tips to help you stick with it.

Let’s start with tips for spending less money because if you don’t spend less, it’s very difficult – or impossible – to save more.

Tip #1 for Curbing Spending: Get the Right Budgeting Program

I know, I know! The moment many people even hear the word “budget,” they get turned off because the word conjures up “deprivation,” just like the word “diet.” But hear me out… [Read more…] “Four Helpful Tips for Keeping New Year’s Resolutions to Spend Less and Save More”

3 Reasons Why the Money in Your 401(k)/IRA Doesn’t Belong to You

If you get regular account statements, you probably know the approximate current value of your 401(k) and/or IRAs, so please write that total down now.

Do you think all that money belongs to you?

It doesn’t… and what people find most surprising is how little of your account value actually does belong to you.

3 Reasons the Money in Your 401(k) Doesn’t Belong to You…

Reason #1: You May Not Be Fully Vested

[Read more…] “3 Reasons Why the Money in Your 401(k)/IRA Doesn’t Belong to You”