Category: Retirement Plan Alternative

The 5 Biggest Threats to Your Retirement Security Today

September 18th, 2020 by Pamela Yellen | Leave a Comment

Recent studies and surveys show that pre-retirees and retirees fear these five threats to their retirement finances most – and with good reason. Which of these keep you up at night?

Retirement Security Threat #1: Outliving Your Money

This is such a big and scary threat that some people say they would rather die before their time than run out of money.

Unfortunately, the likelihood of outliving your money is all too real. The average 65-year-old will outlive their savings by almost a decade, according to a recent study by the World Economic Forum.

To determine how much money you’ll need to have saved by the time you retire, a good guideline is the “Rule of 25,” which says you should multiply your total annual expenses by 25. By that measure, to have $100,000 per year (don’t forget to adjust for inflation) to spend in retirement, you’ll need to save $2.5 million.

It’s also important to consider that you may well live longer than you imagine, and studies show people tend to underestimate their life expectancy.

Retirement Security Threat #2: Market Risk

Why the Best Way to Get Cash Fast is a Bank On Yourself Policy Loan

August 19th, 2020 by Pamela Yellen | Leave a Comment

When the Coronavirus pandemic and shutdown hit, millions of people found themselves out of a job, and many others had their hours and pay cut.

The government stepped in to provide stimulus, but many people had to wait weeks or even months to receive it.

And just when many people needed fast access to cash, charge card limits were reduced or even canceled without warning.

As Mark Twain wryly noted…

A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”

Bank On Yourself Comes to the Rescue…

When you need fast access to cash, what’s the fastest and easiest way to get it? A Bank On Yourself policy loan because it’s money you can get your hands on: [Read more…] “Why the Best Way to Get Cash Fast is a Bank On Yourself Policy Loan”

Why More Experts Are Now Saying It’s Time to Ditch Your 401(k)

August 12th, 2020 by Pamela Yellen | Leave a Comment

A growing number of retirement planning experts are joining the chorus of people saying 401(k) plans no longer make sense for savers in recent articles on Motley Fool, Bloomberg, MarketWatch, and other major publications.

They’re lamenting that one of the biggest appeals of the 401(k) – the ability to make contributions with untaxed dollars in exchange for tax-deferred growth and withdrawals – is disappearing.

The national debt was already skyrocketing before the pandemic spurred the biggest fiscal stimulus programs in history. And a surge in unemployment has lowered tax revenue for federal and state governments.

What do governments typically do to counter budget deficits?

They raise taxes, of course!

And as taxes rise, deferring them in a 401(k) or IRA means you’ll pay more later – potentially a lot more.

Even before the pandemic, the Center for Retirement Research said people lose 25%-33% of the value of their 401(k) to taxes… and most people are shocked when it happens because they forget they’ll owe the IRS taxes on every penny they’ve put in and every penny of growth they’ve deferred.

Do you know what the tax rates will be in 20 or 30 years from now? For that matter, do you know what they’ll be next year or in two years?

Coronavirus Pandemic Exposes Cracks in 401(k) Plans

June 17th, 2020 by Pamela Yellen | Leave a Comment

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

June 3rd, 2020 by Pamela Yellen | Leave a Comment

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?

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

May 19th, 2020 by Pamela Yellen | Leave a Comment

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…

Bank On Yourself – a Financial Bunker for Scary Times

March 31st, 2020 by Pamela Yellen | Leave a Comment

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

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

February 19th, 2020 by Pamela Yellen | Leave a Comment

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…

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

February 7th, 2020 by Pamela Yellen | Leave a Comment

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.

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

January 27th, 2020 by Pamela Yellen | Leave a Comment

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.