If you’ve been following along on our TV show or Blog lately, you’re well aware of our weekly countdown of the 7 Mistakes Savers Are Making with Their Money … most importantly, how to avoid them. These Mistakes are pulled from my 2010 book, “Don’t Follow the Herd.” Last week, we had over 50 viewers of the TV show call in for signed copies! At least I know there are 50 people watching each week.
This week, we bring you the fourth mistake: Stockpiling Hay for Everyone Else but You!
The simple question you have to ask yourself when it comes to this mistake is, “How much use, protection and enjoyment do I have from my money?”
If you’ve done a good job of putting money away, but have no present access or control over that money, what good is it really doing you? What I’ll do today is show you two options for stockpiling more money for your use now AND in the future. Two options Wall Street and your 401(k) plan administrator probably wont agree with because you wont be stockpiling hay for them any longer. Better yet, you can participate in both options at any age.
1) The first concept is Overfunded Dividend Participating Whole Life Insurance. Certainly a mouthful, so let’s call it Overfunded Life Insurance from now on. This type of policy is detailed on page 110 of “Don’t Follow the Herd.” I actually use the example of my son, Phillip’s policy.
I encouraged my oldest son, Phillip, to take this out when he was 23 years of age. He has been paying $500 each month into this policy since taking it out. I told him, before you commit to any other type of investing or retirement plan, commit yourself to this monthly premium. I told him this because I wanted Phillip to learn how to control his money, how to ensure he has access to money, have flexibility with his money and ultimately save himself a lot in taxes. What Phillip didn’t realize at the time he was going to learn was the concept of being his own banker.
Nowadays, employees entering the workforce are being told by Wall Street to contribute to their 401(k) without really having much of a plan from there. The difference between overfunding life insurance and a 401(k) is access to your money, folks.
Should Phillip need some money for a down payment, large purchase or emergency at some point, he could access the cash value of his overfunded life insurance policy (borrowing it tax free) then pay himself back, plus interest (instead of some high interest loan – or worse yet a 401(k) loan.)
As you can see by the illustration above, if all goes well and assuming all loans are payed back plus interest – at age 65, his policy is scheduled to have (based on current dividend assumptions) a death benefit of over $1,700,000. All the while with use, access and protection of his hard-earned money. We can show you a free illustration of how this might work into your GamePlan by emailing my favorite son-in-law, Trey Jurgens – Trey@tonywalkerfinancial.com.
2) The second strategy to avoid stockpiling hay for everyone else is something you’re probably going to hear about more from us in the near future. It is a concept that I’ve been using for years and basically the result of 34 years of retirement planning. What I’m getting ready to show you is a perfect way to minimize risk and uncertainty of your money and maximize access and guaranteed lifetime income – sounds pretty good, huh?
Many of you are saying, “Tony, this roller coaster ride of the stock market – it’s just all over the place. How in the world are you going to give me liquidity and guarantees?”
Here is where I tell you about The WorryFree Retirement® Split IRA Concept. If you have a 401(k) plan, TSP, a lump-sum pension, an IRA or if you’re over 59 and ½ and still working, we can show you how to safeguard your hard-earned tax-deferred retirement savings.
Now here’s how the Split IRA Concept works in simple terms…What we do is, we take that 401(k) plan, IRA or whatever retirement savings you’ve put away in your working years and put it into two or more buckets. The first bucket will be used for immediate income and access to your money in case of emergencies. We will handle this account for you in our Charles Schwab platform. We have minimal fees for this service. Far less than industry standard that I’ve seen in the area and far better service than I hear from clients. The income needs and distributions from this bucket will discussed and determined personally with me and you will sent money (directly to your bank account) as needed. In this account, I’ll try to keep the risk as low as we can while still having some of it invested in the market. But remember, I’m watching these accounts personally and I’m invested in all the same funds.
Now the second bucket, that’s your Mailbox Money® bucket. Mailbox Money® is guaranteed lifetime income. This account will be growing at a guaranteed rate until such time as you want us to send you that lifetime income.
While it sounds pretty simple, this is not as easy as it looks. This is why I have this full-time staff that monitors this process for all our clients. This is the process that keeps it simple for you and makes sure that, should something happen to you, your spouse and your family will be okay. In short, we’re going to take the one IRA to use and enjoy and we’re going to have the second IRA to make sure that your money is protected and you won’t go broke in retirement. Which is obviously the point of all of this!
Both of these concepts are things we specialize in. We want to make sure you understand the rules of the game and more importantly, make sure that you have the most amount of use, enjoyment and protection of your hard-earned money as you can! Not stockpiling it up in the barn with little to no use of your money while Wall Street makes their money on it.
As a fiduciary and an independent advisor, my job is to work for YOU. That’s exactly what we do at Tony Walker Financial. I’d like the opportunity to meet with you in person and explain our process and to see how we can help you worry less about money. It’s easy to do. Give us a call or click Let’s Get Started on our website homepage.
We will contact you and schedule a convenient appointment for you and I to sit down and look at your information. It takes about 30 minutes to go through an initial questionnaire that you and I will talk about. At the second appointment, you and I will meet and I will share, in writing, my assessment for you to look at and to keep. If you want to follow through and do business with us, fine, we would be happy to try to help you in that vein, as well.