Let me be blunt. If you’re like the vast majority of Americans, your retirement plan is about as good as the survival plan of that last lemming heading over the cliff!
For most of us, our “retirement planning” has been manipulated by our employers, Wall Street, and celebrity talking heads – all of whom have their own agendas that don’t seem to prioritize our financial security and well-being. And the vast majority of personal financial representatives have chosen to stick with conventional strategies without even questioning the less-than-stellar results they’ve given us over the years.
When a “plan” proves that it isn’t getting the results it’s supposed to produce, doesn’t it make sense to come up with a different plan? (The answer is “Yes!”)
Over the next several blog posts, I’ll illustrate specifically how and why your conventional retirement plan is failing you and changes you can make that will let you build a retirement savings fund that is safe and secure – guaranteed.
Let’s start with the problems of conventional retirement plans. I know of at least six major pitfalls and traps and I’ll cover each one in detail. The first painful trap is RISK.
Conventional retirement plans have absolutely no guarantees!
Wall Street may have convinced you that you need to incur a certain level of risk in order to build your retirement nest egg. You’ve probably watched your retirement funds in conventional plans zigzag up and down like a roller coaster out of control as they follow the unpredictable craziness of the stock market.
This is NOT necessary!
Do you really think the money you’re saving for retirement is money you can afford to lose? If you’re counting on having that money down the road to provide for you and your family… and if most of your retirement savings are in the market, how well can you sleep at night?
Your grandparents slept perfectly well. Their retirement plans were safe and secure for life!
How did we go from a guaranteed income for as long as you live to a guaranteed nothing? Basically, the government tried to do you a favor.
In 1978, Congress added a new section to the tax code. Knowing that even guaranteed pension plans didn’t provide as much income as many retirees wanted and needed, they created a new section, 401(k), which allowed employees to invest more of their own money for retirement and defer taxes on the money until they actually started taking withdrawals.
Congress wrote the 401(k) section to favor and encourage the use of Wall Street’s non-guaranteed products, such as stocks, bonds, and mutual funds – rather than the guaranteed products that gave our grandparents peace of mind in retirement.
Who do you think spent literally hundreds of millions of dollars lobbying Congress to favor Wall Street’s products?
Why, Wall Street, of course!
How did this “improvement” to the tax code work out for us?
Businesses figured out it would be a whole lot cheaper (even with a small matching contribution) to drop their guaranteed pension plans and let the employees do their own retirement planning. Problem is, few of us are successful investors. (Even most sophisticated investors and the “experts” don’t do very well in the market, but that’s another story.)
As one financial expert puts it, “The 401(k), without any guaranteed returns, is a recipe for disaster. The 401(k) is a speculation bonfire – over 77% of the savings in these plans are invested in volatile equities and mutual funds – which dumps all of the investment risk on uninformed retirement savers. Tying all of retirement income to the stock market is insane.”
Maybe you’re thinking, “But if I invest in products like mutual funds, won’t my funds make money and be relatively safe?”
No! Mutual funds have absolutely no guarantees. And during the 30-year period that ended last December 31, the average equity mutual fund investor received only 3.79% on their investment. That’s according to DALBAR, Inc., the leading independent, unbiased investment performance rating firm.
Which means the average investor beat inflation by less than 1% per year! In other words, you risk losing your shirt – yet still barely stay ahead of inflation.
“What about target date funds? Aren’t they safer?”
Absolutely not! On paper, target date funds sound like a great idea. Take more risk when you’re young, and dial back the risk as you get older. But in practice, they’ve been a disaster!
According to the government’s General Accountability Office, in a recent five-year period, investors in the largest target date funds lost as much as 31% of their money during a five-year period when the Dow Jones Industrial Average dropped less than 2%!
Even worse: The government report also states that because of severe financial market turbulence, some target date funds designed for people planning to retire just two years later lost as much as 40% of their value!
Can you afford that kind of loss right before you planned to retire?
Bottom line: Conventional retirement plans put you and your family’s welfare at risk
The only guarantee Wall Street gives you is that they get paid whether you win or lose.
But I promised you a retirement plan alternative and there is one. It’s a financial vehicle I call Bank On Yourself – and it’s not for lemmings.
It’s for people who are willing to keep an open mind, analyze the facts, come to their own conclusions and buck the conventional wisdom.
A Bank On Yourself plan is based on dividend-paying whole life insurance. But it’s not the typical whole life insurance many financial experts love to hate. The policies I’m talking about have special riders attached that supercharge the growth of your policy so it far outperforms standard policies.
In fact, Bank On Yourself has so many advantages that I’ll pay you $100,000 if you’re the first person to show me a retirement planning method that can match or beat it!
There are 6 pitfalls and traps of conventional Retirement Plans. Which ones are of most concern to you?
- No guarantees and lots of risk
- High fees that erode the nest egg you’re trying to build
- Unqualified administrators and financial representatives who get paid no matter how poorly they perform
- Government restrictions and employer regulations that leave you with no control over the money in your plan
- No ability to access your money without restrictions and penalties if you need it before retirement
- The ticking time-bomb of deferred taxes