Personal Finance Blog for Retirement and Investment Advice

The Ticking Tax Time-Bomb of Conventional Retirement Plans

March 3rd, 2016 by Pamela Yellen | Leave a Comment

One of the biggest selling points of 401(k) and IRA retirement plans is that the money you put into them isn’t taxed right away. Bring out the bubbly to celebrate, right?!

Not so fast.

First of all, some people – hopefully not you! – mistakenly believe money placed into these retirement plans is “tax free.” It isn’t. It is “tax deferred,” meaning that you will pay tax on that money when you withdraw from your retirement plan down the line.

Deferred taxes might sound good, but deferring your taxes is like putting off a visit to the dentist. The problem compounds and will only get worse.

Deferring taxes creates a dangerous potential tax time bomb because you don’t have the answers to two critical questions…

First, what will the tax rates be when you retire? And what will they be 20 or 30 years later?

Is Your Money Frozen in Your Retirement Plan?

February 25th, 2016 by Pamela Yellen | Leave a Comment

One of my biggest beefs with government-controlled retirement plans, such as 401(k)s, IRAs, 403(b)s and Roth Plans, is the total lack of liquidity. The money you’ve socked away in your conventional retirement plan is about as solidly frozen as the iceberg that sank the Titanic! And because of this, if your financial ship hits rough waters, you might end up sinking as well.

Here’s the critical question: How quickly and easily can you get your hands on all the money in your retirement account if you need it before age 59½?

We all know life happens. Cars break down. Roofs need replacing. A tough medical diagnosis can create mountains of unexpected bills to pay.

Every year many participants in employer-sponsored government-controlled retirement plans make early withdrawals for a number of reasons. And every year, the IRS collects penalties related to those early withdrawals.

In fact, in the last year for which statistics are available, the Internal Revenue Service collected $5.7 billion dollars in penalties from Americans who took out $57 billion from their retirement funds before they were supposed to. [Read more…] “Is Your Money Frozen in Your Retirement Plan?”

Who’s Got Control of Your Retirement Plan?

February 18th, 2016 by Pamela Yellen | 3 Comments

Do you remember playing with that kid in the neighborhood who set up a game, and then changed the rules as the game went on to suit himself? Just like those games, you’ll never come out winning with your retirement plan if someone else sets – and constantly changes – the rules!

Here’s one of those inconvenient truths: When your retirement savings are in a government-controlled plan sponsored by your employer, your employer can change the rules at any time. And so can the government.

Despite the mass of paperwork your employer handed you when you first began your retirement plan, your employer’s retirement plan rules are not set in concrete. Employers can change their rules, even in midstream.

For example, not too long ago, IBM decided to change its retirement plan rules. Up until that time, IBM gave employees their 401(k) match with each pay check. But some smart bean counter pointed out that Big Blue could save a bundle if they waited to give the match until the very last day of the year instead of throughout the year.

So what’s the big deal?

What Infinite Banking and Nelson Nash Missed

February 17th, 2016 by Pamela Yellen | 3 Comments

Updated November, 2019

Pamela Yellen was introduced to Infinite Banking through Nelson Nash’s book, “Becoming Your Own Banker: Unlock the Infinite Banking Concept”

I am infinitely grateful to the late Nelson Nash for introducing me to the Infinite Banking Concept®. It’s a very powerful concept that brings to the table Nelson’s life-long study of the Austrian School of Economics.

In this article, I described what Nelson got right about this concept, and my own life-changing experience of how it lets you “Become Your Own Banker.”

However, here are several things in his ground-breaking book that I take issue with, and that have caused unnecessary confusion for readers

**1. His first book, Becoming Your Own Banker®, was copyrighted in 2000.**

What Nelson Nash and Infinite Banking Got Right

February 12th, 2016 by Pamela Yellen | 1 Comment

UPDATED November, 2019

My introduction to the late Nelson Nash and the Infinite Banking Concept® was a major turning point in my life.

Up until then, I was a business-building consultant to financial representatives. The financial representatives I coached were always bringing financial products and strategies to my attention, and over the last 25 years, I’ve investigated more than 450 of them.

Unfortunately, most turned out not to be worth the paper they were printed on.

Finally, one financial representative asked me if I had ever heard of Nelson Nash, and the book he wrote, Becoming Your Own Banker: The Infinite Banking Concept.

I had not, but it sounded very intriguing, so I called and talked to Nelson and ordered a copy of his book. [Read more…] “What Nelson Nash and Infinite Banking Got Right”

Who’s the Bozo Administering Your Retirement Plan?

February 10th, 2016 by Pamela Yellen | Leave a Comment

When you have a plumbing issue, you call in a qualified plumber, right? When you need a medical procedure, don’t you want a qualified doctor? When you go to get your car fixed, aren’t you going to hand it over to a qualified mechanic?

So why would you turn your retirement plan over to an unqualified administrator?

Wait! You didn’t know that you’ve placed your hard earned retirement money in the hands of someone who very likely doesn’t know what they’re doing? It’s one of the common retirement planning traps I’ve been covering in this blog.

According to SmartMoney magazine, 90% of the country’s 401(k) plans are watched over by people who “need no special qualifications and no investing expertise or experience.” [Read more…] “Who’s the Bozo Administering Your Retirement Plan?”

How Hidden Fees Are Sabotaging Your Retirement Plan

February 4th, 2016 by Pamela Yellen | Leave a Comment

In my first blog about costly retirement planning traps, I explained how conventional retirement plans put you in jeopardy of losing money you absolutely cannot afford to lose. Just because all the other lemmings choose to dive over the cliff, doesn’t mean you have to!

Now let’s look at the gremlins of conventional retirement plans that are decimating the nest egg you’re trying to build: FEES.

Do you even know how much you’re paying in fees each year for your retirement account? If you’re like most Americans, you don’t have a clue. The Employee Benefit Research Institute found that only half of 401(k) plan participants even noticed the fee information stuffed in the 14-page disclosure (that requires a magnifying glass to read and 3 years of law school to understand).

And almost no one makes any changes to their plan if they do read the fee disclosures.

Most folks just don’t think fees are all that important. Or, they think they’re unavoidable – sort of like death and taxes.

Wrong on both counts!

The Movie You MUST See If Your Money is in the Market

February 2nd, 2016 by Pamela Yellen | Leave a Comment

You probably already know – or at least strongly suspect – that Wall Street is rigged. And not in favor of the little guys and gals like us.

But this blog post should lay any doubt about that to rest…

Let’s start with the movie you must see if you have any money invested in the market (or need a reminder of why you yanked it out in the first place).

The Big Short is based on the New York Times best seller by Michael Lewis. The main characters are played by Brad Pitt, Ryan Gosling and Steve Carell.

the-big-short It recounts the story of a handful of Wall Street traders who (ultimately) made a fortune by betting against the mortgages that caused the housing bubble… and subsequent crash and Great Recession. [Read more…] “The Movie You MUST See If Your Money is in the Market”

Retirement Planning that Helps You Sleep at Night

January 29th, 2016 by Pamela Yellen | Leave a Comment

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.

Risk, a four-letter word? 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. [Read more…] “Retirement Planning that Helps You Sleep at Night”

Why you need Dow 35,000 today

January 12th, 2016 by Pamela Yellen | Leave a Comment

I have an important question to ask you…

When do you think the Dow will hit 35,000?”

Does that seem like a crazy or dumb question? After all, the Dow closed 2015 at only 17,425. It would have to more than double to get to 35,000. But it’s not a dumb question. I’ll explain why in a moment.

For the last five years, we’ve been tracking the Dow Jones Industrial Average and what that number means to you in your real life.

Sure, the Dow has gone up and down, and it’s gone up more than it’s gone down. But is it up enough to actually give you a return that justifies after all the sleepless nights and stomach-churning highs and lows?

Then there’s inflation. Has the market, as measured by the Dow Jones Industrials, even kept up with inflation? [Read more…] “Why you need Dow 35,000 today”