© 2008–2014 The Hayward-Yellen 100 Ltd Partnership Special Presentation by Pamela Yellen,...
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Transcript of © 2008–2014 The Hayward-Yellen 100 Ltd Partnership Special Presentation by Pamela Yellen,...
© 2008–2014 The Hayward-Yellen 100 Ltd Partnership
Special Presentation by Pamela Yellen, President of Bank On Yourself, for
How to Fire Your Banker, Bypass Wall Street, and Take Control of
Your Own Financial Future
• Pamela Yellen is President of Bank On Yourself
• Programming offered by Pamela Yellen entitled “How to Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future” shall exhibit fair content balance, providing the audience with information of different perspectives from which to develop an informed professional opinion.
• Pamela Yellen has no actual or potential conflict of interest in relation to this program.
Speaker Disclosure
• The Institute for Wellness and Education is accredited by the Accreditation Council for Pharmacy Education as a provider of continuing pharmacy education. Attendees who participate in the interactive portion and submit the completed evaluation form at the conclusion of the program will have credit for 1.0 hour(s) of continuing pharmacy education (0.10 CEU(s)) uploaded to CPE Monitor within 60 days after the program date. ACPE program number is 0459-0000-14-008-L04-P. Initial release date is 02/28/2014.
At the completion of this activity, the participant will be able to:
• Describe the advantages and disadvantages of various retirement plan accounts to determine which one will allow them to best reach their financial goals and objectives
• Explain the three steps to becoming their own source of financing for major business and personal expenses
• Discuss a plan for constructing a retirement strategy which allows them to know what their retirement account will be worth on the day they plan to tap into it
• Identify the differences between “paper” wealth and “real” wealth, and provide examples of each
• Outline the tax consequences of common retirement planning methods
Learning Objectives
• On the day you plan to tap into it?
• Would it be helpful to know?
• Is it even possible to know?
• Will tax rates go up? … or down?
• How long does your money need to last?
What Will Your Retirement Account Be Worth
It’s based on things you
can’t predict or control
The Problem with Conventional Planning
More than half of all boomers won’t have enough money for basic living expenses in retirement
• Food
• Heating
• Medical care
Source: “The National Retirement Risk Index: An Update.” Center for Retirement Research at Boston College, Oct. 2012
Result
• Three in four boomers expect to postpone retirement
• Half think they may never retire
Source: 2012 AARP survey, Boomers’ “Anxiety Index” High
Result
Almost half of all retirees were forced out of work earlier than planned
• Layoffs
• Poor health
• Need to take care of a loved one
Source: Employee Benefit Research Institute
Work Till You Drop?
“After a lifetime of hard work, many seniors will
find themselves forced to choose between putting
food on the table and buying their medication.”
—U.S. Senate Committee on Health, Education, Labor, and Pensions, July 2012
I have enough money to live
comfortably for the rest of my life … if I die by next
Tuesday
Q: $20 stock … goes up by 40 percent—how much money did you make?
A: None—unless you sold your stock and locked in your gain
Test Your Money IQ
Paper wealth is meaningless
when it comes to financial certainty and security
S&P 500:
• Lost 49% from March 2000—October 2002
• Recovered by October 2007
• Lost 57% from October 2007—March 2009
• That’s two losses of 49%+ in just one decade
Stock Market Facts
Two Losses of 49%+Just Since the Year 2000
Are you confident there won’t be another crash in the next 5-10 years … or even tomorrow?
Leo Cullum, The New Yorker, used with permission
Sources: Yahoo Finance, InflationData.com
2,077
The S&P 500 would need to be at 2,077 in today’s depreciated dollars, just to equal its
year 2000 high of 1,527
The S&P 500 closed only 14% higher on February 3, 2014, than it did on March 24, 2000. During
those 14 years, we experienced 36% inflation.
The S&P 500 has had only 0.95% annual growth over
14 years!
February 3, 2014: S&P closes at
1,742
March 24, 2000: S&P 500 closes at record high
of 1,527
Your Retirement “Plan” Powered by Wall Street:14 Years of the S&P 500 Index
Real Life Experience
Dan ProskauerVice President of Technology
• The picture that’s making everyone’s jaw drop
• “If I can help a few people start Bank On Yourself this year instead of next year—or instead of never— it’s worth it.”
Real Life Experience
Real Life Experience
How Is This Possible?
• Volatility is removed
• Saving becomes fun
• You have flexibility and control, because your money isn’t locked up in a government-controlled plan
• Your confidence is restored, so you can enjoy more of life’s luxuries
Bank On Yourself Isn’t a Magic Pill
• Your plan value won’t equal your contribution in the early years
• But because the volatility is removed, you’ll quickly see your net worth go in just one direction – UP!
Real Life Experience
Would you like your net worth to grow like this?
With Bank On Yourself …
Your Paper Wealth IS Your Real Wealth!
You can’teat a
number on paper
An asset that has …
• Increased in value …
• Every single year …
• For more than 160 years
• Dividend-payingwhole life insurance
What Is Bank On Yourself?
• Not the kind Suze Orman and Dave Ramsey love to hate
• Options (riders) to supercharge the growth
• Commissions are reduced by 50–70%
• Can be a powerful financial management tool from day one
• Plans available for people up to age 85
• Don’t rule yourself out due to health problems
Dividend-PayingWhole Life Insurance
• Predictability and guarantees
• Control
• Liquidity
• Safety
• Tax Advantages
Provides anUnbeatable Combination
• Guaranteed Growth
• Cash value (money you can use now)
• Death benefit (money for your family and charity, later)
• Potential for dividends
• No luck, skill, or guesswork required
• Know the value of your account the day you plan to tap into it …
• And at any point along the way
Predictability and Guarantees
• Putting your money in a government-blessed-and-controlled retirement plan is like putting it in prison
• You don’t control the money in your 401(k) or IRA, or any similar plan
• The government controls your money
• They change the rules any time they want!
Control
• The prison warden has your money under lock and key
• While your money’s in the slammer, they can arbitrarily impose any new restrictions or regulations they come up with
• You have no recourse
Control
Who Controls Your Money in a Bank On Yourself Plan?
You Do!
• Life insurance policies are private, unilateral contracts
• The company can’t change the rules without your consent
• That’s the law
You Control Your Moneyin a Bank On Yourself Plan
• No government-imposed limits on how much you can put in
• No government restrictions or penalties for “early” withdrawal or waiting “too long”
• No penalties for taking “too little” each year
• No Required Minimum Distributions
• Retirement income when and how you want it
You Control Your Moneyin a Bank On Yourself Plan
• You can borrow against your cash value any time you want
• No rules requiring you to pay it back on a certain schedule
You Control Your Moneyin a Bank On Yourself Plan
“I had very limited control of my money in my 401(k). I couldn’t
put in as much as I wanted, and I needed permission to borrow my own money if necessary. Bank On Yourself gives me
control over my money.”—David Shelton, healthcare
company vice president
Financing through Bank On Yourself beats financing, leasing, and even directly paying cash!
• You finance everything you buy
• Either you pay interest when you finance or lease
• Or you lose interest and investment income when you pay cash
Liquidity:Fire Your Banker
• Fund a Bank On Yourself plan first, then …
• Use the money in your policy whenever you want
• For any purpose at all
• Set your own repayment schedule
• Your plan continues growing as though you never touched a dime of it!
Liquidity:Fire Your Banker
Liquidity:Fire Your Banker
The Bank On Yourself strategy solves the problem
of having to constantly interrupt the growth of your money, whenever you spend
or invest it!
• Life insurance companies are audited regularly by the state insurance commissioner’s office to ensure they maintain sufficient reserves to pay future claims
• They’re audited regularly by several independent rating companies
Safety
• State insurance commissioner’s office can take over and run the company in the interests of policyholders
• Historically, a failed insurer’s business is taken over by another company, according to the National Organization of Life and Health Insurance Guaranty Associations
• Additional protections are available in each state
Safety
• May be protected from creditors and lawsuits
• Rules vary from state to state
Extra Benefit:Asset Protection
Does having money safe and available to you take
away any of your options?
• You have safety, liquidity, and control
• Greater growth than savings or money market accounts, without the risk or volatility of traditional investments
• Access to your money when and how you want—for purchases or investments
• Get continuous growth, even on the money you’re using
More options and flexibility, not less
You Are Not Putting Your Money in a Straitjacket
Independent Pharmacy Owner Michael Bemis of Bemis Drug:
“My Bank On Yourself plan gives me easy access to capital, and I’m receiving a dividend even on the money I borrowed. It works great for purchasing equipment for my pharmacy, such as a new counting machine.
“Why borrow from a bank, when you can borrow from yourself?
“I get to pay myself interest on the money I loan to the pharmacy for purchases, and it grows my Bank On Yourself plan.”
• Can give you a retirement income with no taxes due
• Reduce the taxes you may have to pay on your Social Security benefits
• Extra tax breaks for pharmacy owners and other business owners
• Death benefit passes to your loved ones income tax-free … and avoids probate
Tax AdvantagesOf Bank On Yourself
• You pay your taxes up front while you know what they are
• No taxes due on your gains in retirement*
• Avoid unwelcome surprises
• Both Roth plans and Bank On Yourself plans offer that strategy
• But only Bank On Yourself has all the additional advantages and guarantees we’re talking about today
Tax AdvantagesOf Bank On Yourself
* Under current tax laws
But everyone knows it’s better to defer taxes with
a 401(k), IRA, etc.
… Isn’t it?
• You need $70,000 per year in retirement• You retire with an average tax rate of 25%
Quick Case Study
TaxDeferred
PlanYou need $93,333You pay taxes ($23,333)You net $70,000
Bank On Yourself
Plan $70,000($ 0) $70,000
How Would You Prefer to Spend That
Extra $23,000 Per Year?
Enjoying life more?Paying more taxes?
And … if tax rates go up and you’re successful
growing your nest egg in a tax-deferred plan, you’ll
only end up paying higher taxes on a bigger number
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Give you guaranteed
growth?
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Lock in your principal and
growth?
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Give you control of your
money?
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Give you tax-free retirement
income?
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Let you use your money without
penalties?
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Let your money grow while you use it?
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Let you access your money
without liquidating?
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Let you fund it every year with no government limits?
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Finish funding itself if you die prematurely?
Retirement PlanChecklist
Does Your Retirement
Plan …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Tell you the plan value on the day you plan to tap it?
SummaryDoes the Retirement Plan
You Currently Have or Are Considering …
401(k)s and
403(b)sIRAs Roth
PlansBank On Yourself
Plans
Give you guaranteed, predictable growth?Lock in your principal and growth, even when the market crashes?Give you control of your money without government restrictions and penalties?Give you tax-free retirement income?Let you use your money in the plan without penalties, however and whenever you want?Let you use your money in the plan yet still have it grow as though you didn’t touch it?Let you access your money without liquidating your investments?Allow you to fund it every year, without limits imposed by the government?Finish funding itself if you die prematurely?Tell you the minimum guaranteed value of the plan on the day you expect to tap into it, and at any point along the way?
As Texas Bix Bender
once noted, “Just
cuz you’re following
a well-marked trail
don’t mean whoever
made it knew where
they were goin’.”
Joe and Jane Pharmacist
• They’re both 45 years old
• Have $25,000 in credit card debt
• Have $135,000 in other personal and business debt
• Want a new $35,000 car every four years
• Want $100,000 for … pharmacy automation … kids’ college … or motor home
Case Study
Joe and Jane’s Personalized Solution
You indicated your biggest financial concerns are:• Putting $$$ into traditional retirement plans that
have been going backwards for 15 years• Lack of savings• Lack of liquidity• Current and future taxes
You said your top financial goals are:• Secure retirement• Help pay for kids’ college• Buy automation for the pharmacy• Pharmacy renovation
Approximately $675,692 in interest payments could leave your home over the next 10 years—never tobe seen again—if you keep doing what you’ve been doing. … And you could lose more than that, if you take on additional debt.
• Moves $50,000 from money market account earning 0.2% to Bank On Yourself plan
• Commits $2,500 monthly from current resources
• Redirects $1,000 monthly to build his personal, private Bank On Yourself plan, instead of a government-controlled plan
• No more premiums after age 70
Funding Joe’s Plan
• Instant life insurance coverage of $1,900,000• Liquid emergency fund of $154,000 in three years• Credit cards paid off in one year• Retirement income of $80,000 per year from age
71 to 99 (little or no taxes due)• • Death benefit remaining at age 95: $660,000
Total potential retirement income: $2,320,000
Your plan would be custom-tailored to your unique
situation and your short-term and long-term
goals and dreams
No Two Bank On Yourself Plans Are Alike
Top Seven Ways Pharmacists Use the Bank On Yourself Method
1. As a safe, predictable retirement plan alternative
2. To self-finance business and personal purchases, recapturing interest they’re now paying to banks and leasing companies
3. As a better way to save and pay for college
4. For investment opportunities (real estate, pharmacy acquisition, etc.)
Top Seven Ways Pharmacists Use the Bank On Yourself Method
5. To provide safe and liquid cash reserves that earn far more than CDs and money markets
6. To fund buy-sell agreements and for business succession planning
7. To take back control of their money and finances
Pitfalls to Watch Out For
Beware of untrained advisors:
• If your plan isn’t structured properly, it could grow much more slowly, lose the tax advantages, or both
• A different life insurance policy type may be recommended – No other product comes with as many guarantees as dividend-paying whole life insurance
Pitfalls to Watch Out For
If your current financial advisor or insurance agent tells you he knows how to implement this, ask him: “If you could have done this for me … why didn’t you?”
Only a Handful of Life Insurance Companies Offer
the Right Policies
What to look for:
• Must offer dividend-paying whole life policies
• Must have paid dividends every year for at least 100 years
Only a Handful of Life Insurance Companies Offer
the Right Policies
What to look for:
• Must offer “non-direct recognition” policy loans
• Must be among the financially-strongest companies in the country (Comdex rating of at least 95)
• There’s an old African proverb: “The best time to plant a tree is twenty years ago.
• The time may never be perfect to start. – We can always find a reason to put it off
You Can Take Back Control of Your Financial Future!
The second best time is today.”