Ted Benna is known as the “Father of the 401(k).” In the late ‘70’s, he worked as a consultant to business owners whose main agenda was “How can I get the biggest tax break, and give the least to my employees, legally?”
Tax nerd that he was, Benna discovered an obscure part of the tax code – section 401(k). Voila! By 2012, nearly 75% of all company pension plans had disappeared!
What does Mr. Benna say about his beautiful 401(k) baby today?
If I were starting over from scratch today with what we know, I’d blow up the existing structure and start over!”1
Per the US Senate Committee on Health, Education, Labor, & Pensions: “After a lifetime of hard work, many seniors will find themselves forced to choose between putting food on the table and buying their medication.” The U.S. Census Bureau says the average value of 401(k) accounts of pre-retirees between 55 and 64 is only$170,645; the average value of their IRAs is only$147,345. And half of all those close to retirement age have less than $50,000 in these plans.
Something went horribly wrong. Actually, several things went horribly wrong, not only with 401(k)’s but also their kissing cousins: IRA’s, Roth Plans, 403(b)’s, SEP-IRA’s and so on.
While doing my research for my new book (The Bank On Yourself Revolution, to be published on February 11), I came across four stunning new wealth-killing revelations about 401(k)’s and IRA’s.
If you have money in one of these plans, I urge you to read this advice about your 401K and/or IRA today to find out how to protect yourself from making costly mistakes:
Wealth-Killer #1: The fees you’re paying may be much higher than you think
I’ve written in the past about how Congress passed a law in 2006 protecting employers from liability as long as they automatically put employees’ contributions into certain types of mutual funds, known as “default” investments.
Target-date funds (TDF’s) have emerged as the default investment of choice. Unfortunately, they’ve also proven to be very risky AND they’re among the most costly mutual funds you can buy. (Would it surprise you to learn the mutual-fund industry lobbied Congress to get that law passed and make sure their interests were protected? Didn’t think so.)
So last month, an article in Forbes (“The Trouble With Target Funds”) revealed that, according to the prospectus of one popular target-date fund, your projected fees and expenses for each $10,000 invested is $2,478 over a ten-year period (assuming it grows at 5% a year).
That’s 25% of your savings!
So, if you had $300,000 in that fund for ten years, you’d get soaked for – are you sitting down? – $74,340! (And that’s just over a ten-year period!) It also doesn’t take into account all the other fees you’re charged in a 401(k).
Americans’confidence in being able to retire comfortably is at a record low, despite the economy showing signs of improvement and the stock market hitting record highs.
That’s according to the just-released annual study by the Employee Benefit Research Institute.
The statistics are bleak:
57% of those surveyed report having less than $25,000 in total household savings and investments. Only 24% reported savings of $100,000 or more
Only 24% are very confident they’ll be able to live comfortably in retirement
Only half said they could definitely come up with $2,000 to cover unexpected expenses within the next month
How long do you think $25,000… or even $100,000 in savings will last a person in retirement? On average, a man turning 65 this year will live another 20 years, and a woman that age will live another 23 years.
Most people’s egos prefer THEIR facts to THE facts.”
And I’ll bet you can think of several people who are guilty of that right off the top of your head, can’t you?
One of my mentors, Dan Kennedy, also noted, “People are quick to dispense advice on any subject, regardless of their qualifications. Most people don’t even distinguish between ‘opinion’ and ‘knowledge.’ That’s why you must.”
When it comes to Bank On Yourself, there’s a lot of opinion being dispensed as fact… and I thought I’d help you sift through three common misconceptions about Bank On Yourself in this blog post…
Myth #1: The commissions paid on Bank On Yourself plans are high
Often, this accusation is made by financial representatives who profit from investing your dollars on Wall Street. They even say agents only sell these policies because of the high commissions.
What they don’t realize is that Bank On Yourself Professionals receive 50-70% less commission than financial representatives who structure policies the traditional way.
I just recorded an inspiring interview with Grammy-nominated contemporary/pop and rhythm and blues recording star – and Bank On Yourself client – Karyn White.
Karyn was in her early 20’s when she became the first female artist to have her first three solo releases hit #1 on the R&B charts. She collaborated with industry legends including Babyface and L.A. Reid, before devoting herself full-time to raising a family.
After an 18-year hiatus, and a fan base that never forgot her, Karyn decided to record again. Only this time she decided to produce her new CD album, Carpe Diem, herself – and pocket the profits the record companies used to make off of her.
In this interview, Karyn reveals:
How she used her Bank On Yourself plan to finance her new CD herself (and why she probably wouldn’t have been able to do it otherwise)
How making the right choices about money puts you in the position of being able to take advantage of opportunities that will inevitably come your way
There’s one big problem with the Report, which reveals that the net worth of U.S.families has been reduced to a level not seen since 1992 – it’s one of the biggest lies ever perpetrated on the American public!
Here’s why: You can’t eat a number on paper!
Those statistics about how much Americans’ wealth had ballooned prior to the financial crash were pure fiction. Unless and until you sell your assets and (hopefully) lock in your gains, you have nothing more than a bunch of eye-popping numbers on paper that have lured most Americans into believing they have real wealth and financial security, when they do not.
There is no shortage of myths or misconceptions about Bank On Yourself or the specially designed whole life insurance policies used for this safe and proven wealth-building method.
One of the most commonly repeated myths is that financial representatives only sell whole life policies because they receive large commissions for doing so.
Often, that accusation comes from financial planners, investment advisors and money managers who want you to invest in the stock market, instead.
When you watch the video below, you’re going to be shocked to discover that the financial representative who manages your money in the stock market is making at least TEN TIMES MORE than the Bank On Yourself Professional, if the same amount of money is contributed each year! (And Bank On Yourself Professionals receive 50-70%less commission than financial representatives who structure policies the traditional way.)
Maybe that’s the kind of thing Mark Twain had in mind when he said…
A lie can circle the globe in the time it takes truth to put on its shoes”
And for pocketing TEN TIMES MORE of your hard-earned savings, what guarantees does your financial planner or money manager give you? Do they guarantee you that you’ll have a certain amount of money when you’re ready to start taking income from your savings? No! In fact, if you ask them that question, they’ll laugh you out of their office! [Read more…] “Busting the Bank On Yourself high commission myth”
…says 75-year-old Margie Alford of Austin, Texas. Yet, Margie’s financial planner is moving her CD money into stocks instead, after fruitlessly waiting for three years for interest rates to rise.
Low interest rates of the past several years have taken a toll on U.S. savers. “The Fed has removed the last shred of possibility that interest rates will revert to normal in the near future,” according to Christopher Carroll, profession at Johns Hopkins University.1
As a result, retirees are taking on more risk… at a time they can least afford to.
With interest rates on CD’s, saving and money market accounts not even keeping up with inflation, what other options do you have?
Have you been disappointed by your 401(k), IRA or other retirement plan? Conventional wisdom tells us these plans are the best way to save and invest for retirement. Yet following this advice has resulted in financial insecurity for most Americans.
Because of this, most baby boomers have been forced to postpone retirement an average of five years.1
I’m often asked how using the Bank On Yourself method to save for retirement compares to traditional plans, so I put together this short video that reveals seven reasons Bank On Yourself makes an excellent retirement plan alternative.
Click the play button in the video below and see how many of these seven advantages you’d like to have in your financial plan…
The Ultimate Wealth-Building and Retirement Strategy… Whether the Market Goes Up, Down or Sideways
Would you like to find out how big your nest-egg could grow – guaranteed – if you added Bank On Yourself to your financial plan? No two plans are alike – yours would be custom-tailored to your unique situation, goals and dreams. To find out what your bottom-line numbers would be, request a FREE, no-obligation Analysis today.
If you’re wondering where you’ll find the money to fund your plan, keep in mind the Bank On Yourself Professionals are masters at helping people restructure their finances to free up money to fund a plan. Here are the eight most common places they look.
When you request your FREE Analysis, you’ll get a referral to one of only 200 financial representatives who have met the rigorous training and requirements to be a Bank On Yourself Professional. They’ll show you why Bank On Yourself is the ultimate wealth-building and retirement strategy… whether the market goes up, down or sideways.
1. Bankers Life and Casualty Center for a Secure Retirement, May 2011