I recently saw a commercial where a company was claiming to help clients get their retirement plans ‘back on track.’ That got me thinking…how long will it take the average person to make up for the losses they suffered during the near market crash? And also, wouldn’t it be nice if something as important as your retirement funds were not subject to the roller coaster ride of the market?

There has to be a shift in thinking, traditional financial planning just isn’t working anymore! Watch this short video where a certified financial planner tells how 40 and 50 year olds can protect their retirement: Video

My favorite part of the video:

Certified Financial Planner: “make sure you’re investing in your 40’s and 50’s, especially in this market, everything is cheap right?”

Anchor: “Yeah except if your retirement plan has tanked lately.”

CFP: “Well that’s the key of being in  your 40’s, you’ve got time.  I mean you’re not going to retire for 20, 30 years right?”

She continues on to say that if you are worried about the economy,  “make sure you’re still investing in your 401k.”

WHAT?!?!?  So let me get this straight, I am upset that 20, 30, sometimes up to 50% of my retirement funds are gone and to make sure I “protect my retirement” I should keep throwing money into the very vehicle that has lost all that money?!?

As I stated before there has to be a shift in thinking, traditional financial planners are still using buzz words like asset allocation, diversification, risk tolerance, and for some reason are still advising their clients to put their money at risk in hopes of high returns.

Why worry about having to get your financial plan ‘back on track?’

If you could save for retirement in an efficient, risk free, and tax advantaged way would you?  Would you rather have constant, predictable growth, or a risky roller coaster ride with an unknown outcome?

While those advised in the traditional manner are postponing retirement and waiting for their investments to make up for lost money, you could be enjoying steady returns and have more control over your financial future.

The key is to stop losing money!

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A bucket with holes

December 11, 2009

IS YOUR FINANCIAL PLAN A BUCKET WITH HOLES?

So imagine you want to build up some wealth over you lifetime (I think most of us do).  The bucket represents your plan to achieve that goal.  The water represents your pool of money.  And the holes in the bucket represent the money that is flowing into your pool and then right back out either unknowingly or unnecessarily.  The main culprits causing holes in your plan are

  • Debt
  • Interest
  • taxes
  • opportunity cost

Here is a startling fact: The average American spends around 30 cents of every dollar earned on interest alone.

To fill your bucket you can choose from one of two options:

  1. Add water to it at a faster rate than it is flowing out the holes AKA seek out risky investments with the hope of cashing in on a high rate of return.
  2. Simply plug the holes and watch your bucket overflow.

Instead of frantically chasing high yield investments that put your money at high risk work on controlling the controllable!

When you implement the banking concept and become your own bank you put yourself in control of your financial future.  Instead of paying 30 cents of every dollar to someone else, pay it to yourself and watch as you actually make money doing something you would have done anyway…making purchases.  Instead of paying cash for major purchases, and losing the opportunity for that cash to grow, finance them through YOUR bank and keep your money working for you forever!  These are only a couple of examples of the infinite possibilities behind becoming your own bank.

So…how do you want to fill your bucket?

What is the best alternative to a 401k?  Thousands of employees are losing their employers match on their 401k plan and on top of that retirement nest eggs are being cut in half due to the recent downturn in the economy.  Some folks who planned on retiring this year have had to put off that luxury for several more years while their funds play catch up.

So what kind of advice is out there?  Well you can go to yahoo answers for some non-expert advice.  Most of the responses (in fact all of them) advise the desperate individual to get an IRA or a Roth IRA.

for more advice you could go to “the finance buff” and he’ll explain, in more confusing terms, the same thing you found on yahoo answers.

You could check with an expert by the name of Suze Orman and she’ll simply tell you to “hang in there!”  here is quote from her site –>”Yes, I know how hard it is to do nothing when you see your 401(k) falling 20% or more, but sticking with your long-term strategy will allow you to have a financially secure retirement.”

You could even go to Dave Ramsey–what kind of advice do you think he’ll give you?  “If you receive a match in your (401k, 403b, TSP), invest here first up to the match.  Then, fully fund a Roth IRA for you (and your spouse, if married).  Then, come back to the (401k, 403b, TSP).”

So as you can see there is a common thread here; if you don’t use a 401k, the next best option (according to the above experts) is an IRA or Roth IRA.

However even before considering a 401k, IRA, Roth IRA or 403b you have to honestly answer the following question:  Who do you want to control your money? What I mean by this is simple, all of the above plans are government created tax loopholes, and as we all know that which the government creates, the government controls.  Don’t believe me?  Lets look at the restrictions placed on these government sponsored plans:

rules and regulations regarding government sponsored retirement plans

  • Total contributions may not exceed 100% of the employee’s compensation.
  • Total contributions may not exceed $49,000 in 2009 and 2010.
  • the total contribution that an employee can make on a pre-tax basis is limited to $16,500 in 2009 and remained at that level in 2010.
  • withdrawals from a retirement account may be subject to an additional tax of 10% if the distribution is made before you reach age 59.5 years old.
  • (with the exception of a Roth IRA) Required Minimum Distributions (RMDs) are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age, and they face stiff penalties for failure to take RMDs.

Well if you ask me I would say there is at least some form of control being exercised when the government limits the amount of money I can save, tell me when I can and cannot access my money, and penalize me for not abiding by their rules.

SO…WHAT IS THE REAL ALTERNATIVE?

The answer may surprise you.

watch the short video explaining the 200-year-old vehicle that, if understood correctly, lets you be in complete control of your money and your retirement!

CLICK HERE TO WATCH

New book now available!!

November 16, 2009

discovering hidden treasures

Head over to my website to pick up a copy of the new book!  available in hard copy or PDF.

here is a little write up about the book:

We live in a new financial world where much has changed, yet most advisors are still peddling the same old stuff. They preach asset allocation, diversification, risk-tolerance, and all the other buzz words of traditional methods that frankly are NOT working. People are postponing retirement, or having to live on much less than they had anticipated. The stock market and real estate have changed dramatically. It’s time to assess what you are doing.
Inside this book you will learn about hidden treasures of knowledge which will help you see how to create, retain, and transfer wealth. These are methods and strategies not often taught in the financial community, but can assist in handling many financial concerns.Questions like:

What is going on in the economy and how does it effect my financial plan?
How is best to save for retirement?
How can I jump-start my retirement?
How can I create additional tax advantages?
Where is the best source for financing my personal and business needs?
How can I protect my assets and pass them efficiently to my heirs?

These and many more questions will be answered as you read through the book. You will find it easily understandable and full of common sense.

Has the economy taken away years of gains from your retirement plan? Is there a better way?

I read a report in US News that over 2 TRILLION dollars have been lost within retirement plans. Most 401K’s and other retirement plans have seen better days to say the least. Not only do they tie up your money until you are 59 ½, but you or someone else needs to constantly manage the investments they are in and then hope that the markets perform.

Company matching has always been the lure to participating in the company retirement plan. Lately though, many companies have reduced and even eliminated the company match. If this has happened to you should you continue to contribute?

And what about taxes on retirement plans?

For years we’ve been under the assumption that we would put money in our retirement plans at a higher tax bracket than when we take it out, after all that is the only way to really come out ahead. However, that does not seem to be the case with most retirees.

I spoke with a 71 year old single woman the other day who said her income, at just under $40,000 per year plus social security, is putting her near a 33% tax bracket with federal and state. In addition 85% of her social security is taxed because of her income. The majority of the problem is caused because she has no deductions, no kids, no mortgage, no business, and most of her income is coming from retirement plans that have never been taxed. The result is she wishes she had never put money in a retirement plan and had paid the tax years ago at a lower tax bracket. Its cost her more to “postpone” the tax and pay it today than it would have to pay it years ago.

Maybe now is the time to change the way you are preparing for retirement. There are alternatives that may be more attractive than the traditional retirement plans created by the government. It’s funny, in a sick sort of way, that the government who created this massive and confusing tax system is the same government who created the “retirement plan” loopholes such as 401(k)’s and IRA’s. Should we trust them? At any time those who make the rules can change the rules.

Do you think taxes are going to go up? How are we going to make our way out of an 11 Trillion dollar national debt? Take a look at the National Debt Clock: http://www.brillig.com/debt_clock/ and it grows by $3.71 billion per day.

The bottom line is that if tax rates are on the rise, which seems inevitable, than why do we want to wait and postpone the tax to pay later at a higher tax rate? It doesn’t make much sense does it?

The question becomes, “what do I do?”  What if I told you there was a better way that offers all the same tax advantages of government created retirement plans but takes the government out of the equation and puts YOU in control?  Click here to view a video that explains this idea.