How to Beat Your 401(k) by 300%
Without Risking Your Retirement
Jeffrey D. Sokol, author
If I told you there was a retirement plan that gave you 100% market upside, with zero market risk, would you put your money into it? What if I told you it was tax advantaged like a 401(k)? Would that sweeten the deal? How about if it gave your heirs a LOT more money than you had in it, tax free? Sounds even better, right? Now imagine that it would provide you with hundreds of thousands of dollars or even 7 figures if you got really sick and couldn't go to work for a while to pay off all of your business/personal debts, even finish funding your retirement. Then, this same plan, gave you 300% more income at retirement, legally, and ethically, with no market risk. Let's dig into it to see if this is a fit for you.
We’ve all seen what happens in when we put all our trust into a system that has failed us in the past. Perhaps the government has failed you at times, maybe the stock market crashed and lost 40% of your retirement account, or maybe it was as simple as the real estate market flopping and the value of your home went down, instead of up. What is the common denominator here? Brainwashing. Yes. Brainwashing.
You’ve been brainwashed. Okay, you’ve been “led to believe” that buying term, and investing the difference is better than cash value life insurance. You’ve been led to believe that a 401(k) plan with the company match is “FREE MONEY!” It isn’t. You’ve been led to believe that pre-tax investing (such as a 401(k), 403(b), SEP, choose your tax code) is better than after tax investing. None of these things are true, or at least not wholly true. Let’s pick them apart and see why, and how you can do 300% better for your retirement.
Cash Value Life Insurance vs Term
Pick your favorite CNBC guru or money management author, and they will tell you to “Buy term and invest the difference” in a tax deferred IRA. While I’m not against term insurance to make sure people have the right face coverage to meet their needs, this is a bunch of hoopla. Here’s the bottom line, Cash Value life insurance such as Index Universal Life (IUL) can give you market upside potential without any downside risk. Why would you invest the “difference” into the market, or any risky venture at all? Why would you max out these plans that put your capital at risk, when there is no need for it? Some companies offer products with No Cap/No Spread on gains, giving you 100% market upside potential, with gains locked in annually as principle.
401(k) Free Money
Your company match is costing you. Though on the surface this seems like an upside to the 401(k), it is actually a replacement for what companies used to do, called “pensions.” Very few companies, if any, today offer pensions. This is a cheap way to buy off the employee without having to provide for them in retirement after a lifetime worth of service. If the market crashes and you lose 50% of your money, which takes 5-10 years to recover, what did you gain? Nothing. You lost years of compounding that will never be regained. With a No Cap, No Losses, IUL product, the fact that you don’t have to make up for market losses is HUGE. You get to ride 100% of the upswing of the market, and stay flat in the downturns.
Pre-Tax or Post Tax?
If you were a farmer, and had to decide on whether you wanted to pay taxes on the seed, or the harvest, which would you choose? The seed, right? Of course, because the seed is smaller. Why wait until the money is bigger, and taxes have increased before you pay them? The tiny bit of money your match is bringing in, even if it is 100% match, is negated by the taxes long term. This tax at retirement cuts DEEP into your account. With an IUL product, we can avoid this all together and it is 100% ethical and legal.
What is in your 401(k)?
Retirement and Risk are two things that should never go together in the same sentence. The notion that one should “risk more while young” is a nonsense building strategy that is antiquated and unnecessary in today’s environment. So what’s in your 401(k)? How much turnover is in those mutual funds? Today, turnover can be as high as 700% in some funds. Does that sound stable to you? No, this is what creates losses and is why 89% of financial advisors can’t beat the S&P 500 year to year.
What are your fees buying you?
Your 401(k) has fees. Insurance policies have fees. Nothing in the financial industry is free. There are differences in for what you are paying, however. You see, in a 401(k), you’re paying for the advice of multiple people, managing multiple funds, trying to reduce risk and maximize gains. Right? Sure. However, how are they doing? Sure, right now it might be rosy with a market upswing, but overall. Have you calculated the ACTUAL rate of return? Not average….actual. They are different. Most 401(k)’s have fees around 3%. Now realize, the S&P 500 averaged an ACTUAL RoR of 3.39% over the past 18 years. There’s an 89% chance your money manager didn’t beat the S&P, and they took 3% for their services. Leaving you with?? Right. Squat.
Insurance has fees as well, but, the policies guarantee that you never lose money in your contract, and you are paying for the “cost of insurance”. That’s right, if you die, you get a Tax Free Estate to your heirs. If you get sick, with the right policies, you can get up to 90% of your Death Benefit, tax free, to spend how you see fit.
How liquid is your money in your 401(k) plan? Not very, right? Often times, if not structured properly and signed off by a CPA, you could end up with heavy penalties and taxes for withdrawing early from a qualified retirement plan like a 401(k). Remind me again why the government thinks they are entitled to YOUR money beyond taxes? At any rate, in an IUL policy, your cash is liquid. You can use the money as your own private bank for car loans, etc. When you pay the money back as you would any other loan, even paying yourself interest, you’ll be earning interest on your money twice. Once in the market, and once on the loan.
So how do we beat your 401(k) by 300% in retirement?
Larger gains, no market downside, only upside, and no taxes in retirement, allows us to get 300% more income at retirement. Every time a 401(k) tries to match an IUL on income, people retiring at 70 are out of money within 8 years.
Indexed Universal Life is an insurance policy that provides a tax free death benefit to heirs, living benefits in case of illness, with 100% market upside potential, and zero downside risk.
For more information, go to www.BeneShieldFinancial.com to set an appointment for further discussion on how you can stop the bleeding in your pre-tax retirement plan today, and start with a solid plan of protection for you and your family.
Jeffrey Sokol is a devoted father, husband, and servant of Christ, who aims to use his contacts and experience to help others in any capacity he can.