Fiscal Bridge

Are you gaining or losing by dumping money into your 401k?

maryjoirmen — Thu, 02 Nov 2017 20:01:11 +0000

Does the next sentence sound familiar?

It’s what I was told to do to save for retirement! Stick money in that 401k and max that thing out! When the market falls hang in there, it’ll come back!

Ugh, my stomach still hurts, and it’s been years since I’ve had a 401k.

Most people earning $100,000 a year or more are maxing out their 401k because that is the only option they believe they have. In return, they may have credit card debt at 19% or student loan debt at 7%. They are paying more interest to other than they are making in that 401k, they have given up access to that money until they are 59 ½!

Ask yourself, what could you do with that money today if you had it in your pocket?

Pay Down Debt

Go On Vaca Now

Start a Business

Buy A Company

Could you pay down some debt, could you go on vacation now, could you buy a home because you’d have down payment money, or could you start a business or buy real estate? The options are endless of what we could do, but we are told not to touch it, it’s for retirement!

Well, I want my sports car, and I’m going to drive it too. I don’t care how pretty it is I’m not just going to look at it from afar. That is just what you are doing with your 401k, looking at it from afar while you give up opportunities or pay more interest today for other things.

This investment idea of IRA and 401K’s came along in 1974 and 1980. Before the new investment ideas, people did not put their retirement savings in the market, they put money places they knew would have guaranteed returns. Since the inception of the “market driven” products, we have been conditioned to think that is the place for money and if we lose it we should just hang in there.

Well, I am not sure about you, but I am NOT a gambler nor am I a fan of government-made rules.

The Reality of the 401k

If the government came to you today and asked you to go into business with them would you? If they asked you for money and then told you they’d make all the rules, would you hand over the money? I bet you are shaking your head, “NO!”

This is exactly what you are doing by putting money in a 401k. You put in the money, and they make the rules. They get to decide how much you can put away, they get to decide when you can take it out, they get to decide how it’s taxed and they get to decide what the penalty is if you take it early. They make the rules; you just play their game. (and hang on for the ride)

What opportunity are you losing by not using that money today? Do you want to start a business, buy a company or get some debt paid off, but you can’t because you can’t access the “retirement” money without penalty? You may be able to borrow against it but again there are rules to that and when you borrow against the 401k money is no longer earning you a rate of return. You don’t even get to control the payback terms on your money!

Is the “best yet to come?”

The majority of Americans have given their money to someone else and hoped for the best. When the best doesn’t happen, they blame the people they blindly hoped would take care of it for not managing it right. I say it’s time to control that retirement account yourself by putting your money into a tool that allows you to use it today to pay down debt and then use it later for your retirement. Crazy? Yes, it does seem a bit crazy. Heck, let’s be honest it seems too good to be true and a scam!

If you feel that way reading this article then I am glad to see that, I felt the same way and thought for sure the people who showed this to me were going to jail! But instead of walking away, I educated myself on the subject and found it’s not too good to be true. In fact the wealthy are using this strategy and ensuring their family’s wealth continues to grow generation after generation.

My book Wealth Without the Bank or Wall Street explains the inner workings of the solution and strategy to not losing money by dumping it into your 401k. The book will even show you why the match your employer is giving you may not be as good as you were told it was.

If you don’t have the book grab it now so you can be sure you have what you need for retirement without risk! I’d rather be guaranteed money…..remember I don’t like to gamble.

In addition, my friend Barry J. Dyke will be in Bismarck, North Dakota for the Secure Wealth Builders Conference. If this topic piques your interest, you should be in the room when he shares a few things from his books Pirates of Manhattan, Pirates of Manhattan II, and Guaranteed Income.

✓ You will be shocked to learn that the banks use the same tool I talk about for their Tier 1 capital (the money that makes them look good on paper).

✓ You’ll also be shocked to learn that major companies like GM, Verizon and Motorola are moving billions of pension money from the market to life insurance products to guarantee their employee’s retirements.

✓ You’ll also be shocked to learn that insiders of major banks are selling their shares, but telling you to buy them.

Barry has done all the research and he’s got enough experience on the floor of Wall Street to back it up. Many can’t point out the facts and prove this is happening but Barry does, and it’s a bit alarming.

What You Can Do Today

If you have had any thoughts of fear or doubt around your 401k, this is must-have education you will want to spend time and money on. I am not here to scare you but prepare you for your retirement savings with guarantees rather than assumptions. I don’t want to see you as the next greeter or worker of the retail store because you NEED to supplement your retirement.

Please order yourself a copy of Wealth Without The Bank or Wall Street or attend the conference and then let’s visit. I’d love to share more and educate you so YOU can make the best decision for you.

Mary Jo

North Dakota Pensions Are Underfunded! So are SD, MN and MT!

maryjoirmen — Fri, 27 Oct 2017 20:49:38 +0000

The American dream was 30 and out. You only have to work thirty years for your employer and be set with retirement.

Earning a pension, like many employees and retirees currently have in North Dakota, was the ultimate goal and a key to the American retirement dream. It was taught that a pension will take care of you until death and even possibly take care of your spouse until death should you die first. It was sold as “guaranteed to never to run out” and far better option than the 401k which you may out live.

Pensions were a wonderful tool and a solid retirement plan before the birth of the 401k. Employees really did work their “30 and out” and retire with no income worries. The money (checks) came to them each month like clockwork. They knew exactly what that monthly check would be, and it never changed.

With the history of the pension security blanket came the thought process of, “My company will take care of me.” Employees became comfortable and even complacent about what was going on with the pension.

Today’s pensions are nothing like the pensions from a century or even half a century before. Pensions use to be put into a life product (typically annuities) where the pension managers knew they were getting a guaranteed rate of return and they knew they would have the money to pay out.

Today’s pensions are put into market-driven products, the same products 401K’s are put into where there are NO Guarantees! Nothing. Many pensions (including my husband’s) have been mismanaged to the point of a collapse. Pensions are underfunded and retirees are taking a cut to their (once promised and already earned) monthly retirement income. Instead of the known dollar amount, these employees are now scrambling and coming out of retirement to earn supplemental income. Instead of 30 and out it’s more like 40, out and pray. With the current system and current suggested retirement plans, there is no longer a guarantee of anything – except you’ll pay taxes and die.

Whose Pensions Are At Risk?

I’m sure you’re thinking – this can’t be “MY” pension. Newsflash: This is not just union pensions I speak about. State employees think their pension is safe because they have not received letters telling them otherwise. (What letters are sent? Hundreds of thousands like this one) Pension managers don’t notify you when things are sliding south, just when it’s already there. In my husband’s case, he didn’t get a letter until it was too late to even save the pension, it was already at a critical state. Now pension managers, who were trusted by large employers and groups of employees, are looking at the gov’t for a bailout!!! Do you think your state is going to warn you early on? Heck no, they are going to try to “save” it by praying the market goes up and they can overcome the losses. Repeat after me, Forty-Out and Pray.

As of 2016, Bloomberg reported in its article, Pension Fund Problems Worsen in 43 States, it shows North Dakota’s pension was only funded to 65.9%!

Down 4.5% in one year and 21.1% since 2009. 2009 data was published in Barry James Dyke’s eye-opening book, Guaranteed Income.

Today, North Dakota officials are asking state employees to cover a higher percentage of their health care insurance expenses. What was the reason given? I hate to make assumptions, but could state officials and pension managers be trying to manage the risk and underfunded pension the same way my husband’s company managed theirs? He too saw those extra dollars going back in when they never had to before.

Looking at my surrounding states we see the South Dakota pension was funded to 96.9% as of 2016; the Minnesota pension was funded 53.2% as of 2016 (losing more than a quarter of its value since 2015); Montana pension was 71.2% funded as of 2016.

Should Employees Start Creating Plan B?

If the data reported above does not scare you, it should! Barry J. Dyke the author of the book Guaranteed Income gives more details about these underfunded pensions. In his book, he shows how states are expecting a 7.5%-8.5% rate of return on their money. The market average over the last 16 years has been 6.12% for the S&P WITH dividends and 4.11% without dividends. What happens when they are already underfunded and they are not getting the projected return? It just gets worse…they start asking for more money from pension contributors and you extend your time at the company so you maybe have something for retirement.

Barry also addresses how companies like GM, Verizon, and Motorola are pulling BILLIONS of dollars out of the market and putting them into life insurance products to ensure their employees will have a pension. If the massive companies are transferring risk, you may want to really consider why.

Plan A, market-driven products, for company’s 401ks are no longer working. This is very powerful for a number of reasons, first, you no longer can count on your employer to take care of you, you MUST take care of yourself and have a plan A. Make that pension plan B. Employees have a right to complain, but in the end it’s never a good idea to blindly let someone else take care of you.

Barry gets into details about North Dakota pension status at 0:30.

Second, Barry J. Dyke will be in Bismarck, ND for the Secure Wealth Builders Conference talking about this very thing. If you are unaware of what your pension is doing and want the inside scoop on what’s going on you will want to attend this conference November 17 & 18th.

Barry has done extensive research on the market, how it works and what you can expect. In addition toGuaranteed Income, he wrote two other books, Pirates of Manhattan – which is a NY Times Best Seller – and Pirates of Manhattan II, to expose where the banks put their money and how the markets are worked by insiders.

What You Can Do Today

You can no longer be complacent and think someone else will take care of you. No one cares about you like you do. It’s time to make that plan so you know you are ready to retire and the pension is your backup.

If you want a guaranteed income to be your plan A then you will want to order Wealth Without the Bank or Wall Street. You will find what you need to create your own pension that you are in control of. It’s the same system the wealthy are using – I thought it was illegal! So before you think – “I’m not wealthy.” – so I can’t use this same system, think again.

I hope to see you at the Secure Wealth Builders Conference and/or visit with you after you’ve read the book.

Mary Jo

Insurance Policy Examples: Bad Policy #3

maryjoirmen — Sat, 19 Nov 2016 21:20:58 +0000

If you have not looked at the bad policy #2 yet I suggest you go back and read that one. This one follows #2 because it is on the same insured and from the same agent/company.

The only difference here is this policy is 23 years old already and it even terminates faster than the last one! Yes, you have that right, by age 73 the insured has no death benefit left because the fees and charges are being taken from cash value to supplement the premium.

If you read the blog on “bad policy #2” you remember the insured is non-insurable and has no money to get another policy that will last until he passes. Which is most likely at age 84 because he is male.

He would most likely be able to put more money into these policy premiums but guess what, he doesn’t have more money!

Make sure your policy is right from the beginning so you are not caught in this same situation. Again, call or email me and I would be happy to take a look at what you have. That is what this insured did. I am ok with that, I was not able to write another policy for them but I did help them see and understand what they have.

<< See Bad Policy Example #2

Insurance Policy Examples: Bad Policy #2 (Variable Universal Policy)

maryjoirmen — Sat, 19 Nov 2016 20:13:57 +0000

The first “bad policy” from the Fiscalbridge library was a Variable Universal policy and here we are going to look at a Universal. I call these kinds of policies “cross-breeds” because there are a few differences but at the end of the day, they are not performing better than each other.

Again, I have removed the name of the company as I don’t feel the company is important. It’s the type of policy and how it’s being sold that is important. These policies can work if you fund them correctly and hope and pray your return is what they (the agent or company) say it will be.

What you are seeing here (sorry it’s a little small) is $1,801.04 a year premium. He has paid a premium on this policy for 16 years already and should have an established policy. Yet we look down to year 28 when the insured is 69 years old and see his cash value starts to decrease every year, even though he is paying his premium. Continuing to follow those numbers we see by age 80 his policy terminated due to no cash value. Unless of course, he wanted to pay unbelievably high premiums to keep it in place.

This is based on a 3.25% rate of return. That is not even that high of a ROR, yet the policy is not going to last.

This story does not end well. This insured is no longer insurable as he has an aneurysm by his heart. On top of that, he does not have enough money to start another whole life policy which means death benefit is very very important to his family. Unlike most people who call me and want cash value, these people wanted both. I can’t give them either!

Their agent did not look long term or they would have seen this themselves. This kind of stuff rips me apart. I can’t save the policy nor can I help them save the farm they are operating. The only thing I could tell them was he has to pass before 80 or there will be nothing there.

No one time their death and these policies are putting time frames on our lives.

Please watch what you are buying. If your agent is not looking long term you need to be. It is beyond me how agents don’t look at those dashes and show their client that the policy may terminate at that time. Look at your policy are there dashes or zero’s before the illustration stops?

If you have questions on your policies, whether variable universal or whole life, please call me or email them to me so I can take a look. If they are right I’ll tell you to keep it. I am not here looking to replace people’s policies, I am here looking to educate and be sure you have something when you were supposed to have it.

<< See Bad Policy #1 See Bad Policy #3 >>

Want to learn more? I recommend these books: Wealth Without The Bank, Financial Independence in the 21st Century, Becoming your Own Banker and Building Your Warehouse of Wealth

Insurance Policy Examples: Bad Policy #1

maryjoirmen — Sat, 19 Nov 2016 19:54:03 +0000

Over the years, I’ve accumulated illustrations and a handful of insurance policies from my clients, people who have attended the Secure Wealth Builders Conference, and others who end up in my office because they didn’t see the light at the end of the tunnel. The information in this post is meant to educate and create awareness for those looking for answers and those who want to make sure their insurance policy is set up to benefit them the most.

If you’ve read any of my books or blogs, you have heard me talk about fees and charges inside policies that are not whole life policies. Other permanent products have these and on most account agents are sharing this information with you.

Here is one of those charges: Cost of Insurance (COI) is the expense factor which is the amount the company adds to the cost of the policy to cover operating costs of selling insurance, investing the premiums, and paying claims.

Every company has these COI charges but how they are handled is not the same for every company. Mutual companies take these charges from your dividend before they give it to you. Meaning the dividend you get is after all these are paid, yet you still get a dividend! In a policy like you see below, that does not happen.

What you are looking at here is a variable universal policy with a non-mutual company. First things first, there are no dividends being given to policy owners so there is no place to get this money from beside you as the policy owner. Second, in these companies have recently gotten in trouble for astronomical increasing costs of COI’s. As you can see here, the COI charge was $3,662.39 and the projected amount for next year is $4,402.08. That is an increase of $740 in one year!

These COI’s are increasing rapidly with some companies because they have over projected the rates of return on these policies. The difference has to be made up somewhere and that is being passed off to you.

You can clearly see this insured has a yearly premium of $1,284.50 and his COI is MORE than his premium! What are they doing to cover the difference? They are taking money from his cash value to supplement.

Look at is cash value, there is only $3005.30 left, this policy will collapse on him the next year unless he pays in more than the premium due. His premium plus his cash value does not even cover the projected COI for next year.

Sadly, this policy was issued in 1983, it was 2015 when he brought this to me. He was sold this policy that he would have money for retirement and make great rates of return. He is now around 83 years old and he has NOTHING!

When I warn about these policies it is not so I can sell more insurance, it is so you as the consumer are educated enough to make the right decision. Whole life is not the same as these other permanent products. Whole life with a mutual company is not the same as whole life with a non-mutual company. Dividends and guarantees are important.

This story is just one that I’ve heard over my career.

If you see anything here that you have questions about or if it sounds familiar, please contact your agent.

8 Reasons to Borrow From A Whole Life Insurance Policy and not a 401k

maryjoirmen — Tue, 20 Oct 2015 16:03:08 +0000

Borrowing from your company-paid 401k is a benefit that many are using to fund life’s necessities, so I occasionally hear, “Why do I need to put money into a life insurance policy when a 401k offers me the same benefits?”

These “benefits” through a 401k are hardly the same as a whole life insurance policy, the difference may seem little now but as you read on you will soon notice this is a huge difference.

These 8 differences you need to know…

When borrowing from your 401k, the money is removed from the market and placed into a side fund. This means the money no longer has the ability to earn any kind of interest on while you are using it.

WLI: You borrow against the money in your policy which allows your money to remain in the cash value account earning interest all while you are using it.

Payback terms are set to a 5-year time frame and automatically taken from a paycheck. (Unless the loan is for a home then the terms are longer than 5 years.) Payback terms cannot be changed or stopped.

WLI: The borrower determines the rate at which the loan will be paid back, the amount of each payment and payback terms can be changed at any time.

If employment is terminated while a loan remains outstanding it has to be paid back in full within 60 days. If the loan is not paid back the loan amount has to be claimed as income and a 10% penalty will be applied. (standard in most plans, but this penalty may vary)

WLI: Is not connected to employment which allows for more flexibility. This is great since the average length of employment is now 4.5 years with an employer.

401k loan rules are confusing. Some plans may only allow you to take one loan in a 12-month period of time. If your plan does allow for multiple loans, figuring the maximum amount you can borrow isn’t as simple as subtracting your current loan balance from the maximum you’re allowed to borrow.

Instead, your maximum loan amount is based on the highest outstanding balance you had on your loans in the previous 12 months. For example, say your plan allows loans up to the IRS maximum, and you have one loan outstanding for $20,000. If the balance was $35,000 11 months prior, those $15,000 in payments won’t be considered for your loan application. You’ll be allowed to borrow only a maximum of $15,000, or $50,000 minus $35,000.

WLI: Whole Life Insurance loan rules are simple. Any number of loans can be taken within a year’s time as long as there is cash value available to borrow against.

You only have access to half of your money. The amount available to borrow is up to 50% of your vested amount or $50,000 regardless if that loan has been paid back or not.

WLI: Policy owners have access to 90-95% of their cash value and are able to borrow against that entire amount.

Control rules are complicated. Some 401k plans may require consent from the spouse before money can be borrowed.

WLI: Control rules are simple. NO consent is needed from the spouse or beneficiaries, the owner has100% control.

Any loans on 401k’s are counted as a loan on lender loan applications.

WLI: Cash value loans are not subject to lender disclosure.

Old 401k plans normally do not allow owners the ability to borrow from it.

WLI: Cash value is available to borrow against regardless of the age of the policy.

As you can see these 8 differences are reasons you should consider a new way to prepare for retirement unless you’re ok with the government’s ability to handle your money. One never knows what is going to happen in life and having control of your money should be a priority.

SIDE NOTE: Have you ever researched how much of your 401k contributions are lost to fees? This answer surprises all of my clients. Get the answer here in this 401k Fee article here.

This is money you put into that 401K, yet you are not given control because the government doesn’t feel you are responsible enough to save for retirement so they have restricted access, created rules that support their goal and assumed control.

To get more information on how whole life insurance policies work in your favor, read the book Farming Without the Bank to find out more. Or if you have an understanding of them and would like to put one to work for you, call our office at 701-751-3917.

Information on 401k loans obtained from http://www.guideto401kloans.com/ and http://www.ehow.com/info_7823801_401k-another-loan-prior-repayment.html

Why the 401K Match May Not Be Free Money

maryjoirmen — Tue, 28 Apr 2015 20:33:31 +0000

Today I visited with Wade Borth, who is licensed to sell security products and a certified Infinite Banking Practitioner, about why there is a misconception that a 401K match is a free money.

Watch it here and be sure to turn up your volume as I am a bit hard to hear, however, Wade was fine so listen up.

http://fiscalbridge.wistia.com/medias/skhrv9kljj?embedType=popover&popoverHeight=352&popoverWidth=624&videoWidth=640

Investments are contracts with the government

maryjoirmen — Wed, 22 Apr 2015 17:46:08 +0000

What an accurate thought by Mr. R. Nelson Nash, when he said IRA’s contracts with the government. I heard this while I was at a think tank for Infinite Banking and sat back and thought well that is a big TRUE statement!

We stick money into a 401k, IRA, Pension, etc and we carry all the risk but the rules are not made by us, they are made by the government. The government tells us:

-how much we can contribute
-when we can take it out
-what our penalty will be if we take it out early
-what our penalty will be when we wait too long to take it out
-should they want that money they have full access to it.

There is no way I would go into business with someone where they made all the rules I put up all the money and had no guarantees on my investment. No way in heck, yet this is what 50% of American’s who contribute to their retirement plans are doing on a daily basis.

On top of that, we finance everything we buy. We go to the bank and finance that car, house, camper, and boat when we could have just used our own money instead of paying someone else to use their money. What we pay out in interest far exceeds what we make as a rate of return in the retirement accounts.

As R. Nelson Nash says himself, ” just another IRS plan that is an exception to the problem the IRS caused in the first place – i.e, onerous taxation. When one participates in a government plan he is letting the government control his thinking. The net result of this course of action makes him into a slave of the state in due course of time. I encourage everyone to avoid such plans for this reason.”

Rethink your investment, aka contract with the government. In the meantime, I am going to keep my money under my control as much as possible.

Mary Jo

3 Simple Things that Will Keep You from Retiring

maryjoirmen — Thu, 02 Apr 2015 03:06:37 +0000

From grade 5 through the rest of our lives we are being taught that the market is the place to put money yet none of us really know anything about it. When you sit down and really think about it, why are you putting money into a system you know little to nothing about?

Everything we buy in life we put some sort of research and effort into our decision. Yet the biggest thing we ever save for in life we just hand over to someone else to manage and we ask a few questions and in most cases, they teach us very little about it.

There are 3 things you really need to know that you are not being told or taught. These three things are the difference in retiring with money or broke and not retiring at all. It is that serious.

1. Average Rate of Return

I have written about this already in my blog Market Math so I will just touch on it here.

The most common term in the financial world is the average rate of return. We all know the higher this number the better. However, this number lies to us:

For example look at the chart below. You start with $10,000 and earn 100% so your ending balance is $20,000. The next year you lose 50% and you are back down to $10,000. The third year you earn 100% and you are back up to $20,000 and the fourth year you lose 50% again and your final ending number is $10,000.

You started with $10,000 and ended with the same $10,000. Investors would say this is an AVERAGE rate of return of 25% because it is. That is the average. The ACTUAL is 0%! You did not make a dime, yet they lead you to believe you made money and they were doing you a favor.

Average means nothing, actual means everything.

2. Time will make up the lost money/Risk is ok when you are young

Again, look at the following chart. It proves this is another huge misconception. What this is showing you on the left, is a savings vehicle that pays a steady 5% without interruption. After a ten year period, you would have $16,289. When you look at the right side you are seeing a market loss of 20% year one and from then on a steady gain of 8%. After a ten year period that one-time loss of 20% left you with $15,992. Less than the tiny 5% steady rate!

A loss at any time is detrimental to your retirement system. Many think they have made the money back, that is because they continue to contribute. take out your contributions to see the true growth of your investment.

3. The company match is free money

I too have written about this in my blog post, Why Your 401K Match is a Lie but will touch on it again here.

As you see, I have two calculations, the one on the left is your contribution of $3,000/year growing at 4% over the next 25 years and the one on the right is the company match of 100% performing just as yours does.

129,935
+129,935
=259,870 at retirement

You have to pay tax on this money, so let’s assume a 35% tax bracket.

259,870 X 35% = $90,954.50 goes to pay taxes

70% of your match went to taxes!

Yes, you will hear stuff as you’ll be in a lower tax bracket. That is not true unless you are forced to live on less than you are living on today. Do you want to change your lifestyle? I don’t. Read the other blog to get more details on this.

These 3 things can be the difference between retirement or not.

Mary Jo

Roth IRA’s VS Whole Life Insurance

maryjoirmen — Thu, 12 Mar 2015 03:09:12 +0000

Sadly, I hear this way too often and just this week I have heard it three times, clients being told by someone else that a Roth IRA is the answer, not a whole life policy. This happens often as a Roth has similar qualities of a whole life policy and it’s easier to believe in the Roth because it’s what we are conditioned to believe.

Let’s be clear, very early on here, life insurance is NOT an investment.

There are technicalities of a Roth that need to be considered with some of these points and to do this I encourage you to visit the following links. One is: https://www.fidelity.com/viewpoints/retirement/nine-reasons-roth
Two: http://www.forbes.com/sites/ashleaebeling/2014/05/27/the-roth-ira-mistake/

Now you get to decide what you want to do with your money so educate yourself about these two things. Do not, during this education process, short suit yourself by taking one professional’s word for it without talking to the other professional.

As usual, if you have questions or comments let me know.

Mary Jo

PS – if you want to leave nasty comments, don’t bother. Be civil.