Thursday, February 25, 2021

Retirement Planning 101: The Income Trap


What if the biggest risk to your 401k isn’t risk of loss or unknown fees dragging down your returns over time?


What if the biggest risk is you might have to live off of 3 to 4% withdrawals per year in retirement?


If you’re within 10-15 years of retirement and not familiar with the “Safe WIthdrawal Rate”, you should be.  This is the percentage amount Wall Street recommends you withdraw each year to avoid running out of money in retirement.


You’re being told to max out retirement contributions but it’s only half the story.  As you get closer and closer to retirement, the real story is how much income will you generate and how?


Let’s face it, if you’re not retiring with a pension, you need an income plan more than you need a savings plan.  The biggest 401k/IRA asset you accumulate still leaves you stuck surviving off a “safe” 4% withdrawal rate. 



Every $1,000,000 you save would only net you $40,000 a year, and this is before taxes! 


Do the math for your situation.


How much will you need saved to generate the income you need?


Here’s Wall Street’s retirement plan for you.


Save more, work longer, take more risk, or make sacrifices to retire sooner.


Or it's some combination of those options.


Which option do you choose?


None, right?


Hopefully, you’re starting to get the picture.



You see, if you’re within 10 to 15 years of retirement, every dollar you save for your retirement must now be allocated as efficiently as possible to produce as much income as possible.  


Instead of following mainstream financial advice and building the largest 401k or IRA possible in an all market based approach, you should be learning how to create the largest and most predictable income stream for your retirement with the least amount of risk and with as little money as possible.


This means having a retirement plan that is ruthlessly efficient in obtaining the highest and most desired retirement end goal:  Income and as much of it as possible!


Sadly, here’s the reality you'll face when you go to retire unless you get your retirement income conversation started now:  


All your retirement assets in the market is the riskiest retirement strategy you can take unless you know the answers to these 2 questions:


How long will you live?

How much income will you need?


If you don’t know the answers (and who does?), should you really be risking 100% of your retirement on the probability of lasting at least 30 years at a 4% withdrawal rate?


Risk of loss isn’t the biggest threat to your retirement plan.  


The risk of not having enough income each month should be your #1 concern but you’ve been led to believe having the biggest balance sheet is all you’ll need to have a worry free retirement. 


THE BIGGEST ASSET THEORY IS A LIE


That’s why retirement income planning is on the verge of the biggest changes in over a generation.


Ask any retiree with a pension if they would trade their pension for a 401k.  It’ll never happen!


Fun fact:  people retiring with pensions live longer than those retiring without a pension.


The reason why is simple.  Financial stress and anxiety is eliminated when you know you have more money arriving next month no matter how long you live.


Have you ever noticed the mainstream narrative is to build the biggest asset possible instead of the largest income?  Who benefits from that?  The answer shouldn’t surprise you.


You’ve been told for the longest time to max out your 401k, take the employer match, and you’ll be able to retire with a lot of money.  It’s good advice but only until you realize you still have to figure out how to create the largest income possible which no one ever teaches you how.



Let’s face it, you can’t take your brokerage statements to the grocery store.  Those numbers don’t buy the groceries!  You have to turn it into income first!


So the question that you should be asking yourself is:  How can I generate the largest and most predictable income for ALL years of my life?


Imagine retiring with more income each month and never having to worry about running out of money or that you’ll leave your kids with little to pass on. 


If you’re looking for simplicity, efficiency, levels of guarantees, and leaving a legacy is important to you, we invite you to schedule a strategy session to learn how you can create what we call a “Pension 2.0”.  


We’ll show you how to maximize your retirement nest egg to generate income on average 50% greater than your current retirement plan while still staying invested in the market.


Use the link here to schedule your strategy session:


http://bit.ly/retirement-income-strategy


Thank you,


John Montoya





Monday, February 8, 2021

Bitcoin Newbies: The Best Way To Start Owning Bitcoin




If you are new to Bitcoin this is a quick start guide so you can get started OWNING Bitcoin. Make it your goal to own 1 Bitcoin. With only 21 million Bitcoins that will ever be created this is an asset class that you need to dip your toes into so you're not looking back in 5-10 years wishing you had. 

I'll be adding content to help you better understand what Bitcoin is all about but just like you don't need to understand how the internet works to shop on Amazon or do your online banking, you can start to own Bitcoin safely and in the case of my first recommendation, Lolli, you can begin to own Bitcoin without buying it directly on any exchange. 

Bitcoin is the internet of money. It's time to start building a position if you haven't already!

(FULL DISCLOSURE: the links below are referral codes.  You and I may both receive Bitcoin when you use the referral code to register.)


Earn Bitcoin When You Shop



Lolli

Earn Bitcoin when shop at over 1,000+ partner stores like Ebay, Nike, Adidas, etc.




Where to Buy and Hold Bitcoin


Voyager


Buy, store, and earn interest on your Bitcoin (and other crypto) while you hold it. Easiest to use exchange that combines earning interest.  Only available on your mobile phone.

I'm inviting you to start investing in crypto with Voyager. Download the app and trade $100 to get $25 of free Bitcoin.

Use code 7JPYZM or this link to claim your BTC:




Celsius

Store your Bitcoin and earn interest like a bank. You also have the ability to leverage your holdings via loans like you can with Infinite Banking Whole Life policies.

Join Celsius Network using my referral code 1698339749 when signing up and earn $20 in BTC with your first transfer of $200 or more! #UnbankYourself





To use Celsius you'll first need to own Bitcoin.  Use Voyager to buy Bitcoin and you can then send your Bitcoin from your Voyager wallet address to your Bitcoin wallet address (think of this as your account number) on Celsius.


Think of this as a 1-2 punch.  Buy on Voyager, store on Celsius.  


While you can earn interest on your Bitcoin on Voyager, Celsius will allow you to bank your Bitcoin holdings (take loans against it).  If you are an Infinite Banking client, you will understanad the importance of being your own bank. 


Recommendations On How Much To Buy



Only invest what you can afford to lose.  I don't recommend making Bitcoin more than 10% of your portfolio.  As you build a base, it is likely Bitcoin could become more than 10% of your net worth.  Let it happen organically and over time.  As a Bitcoin Newbie, $100-$200 as your budget can afford it will allow you to start building a position that you can confidently grow into as you learn more about Bitcoin.






Friday, January 29, 2021

Which Online Financial App Do You Recommend?


There seems to be a growing number of online apps in the marketplace that are being developed to help people get financially organized and see their assets in one place synced in real time.  Very helpful for debt management but based on what I've investigated for wealth building, there's a million dollar idea out there for software developers...  


This is because the mainstream retirement planning model is based on a flawed premise that goes like this:



Accumulate the largest balance sheet possible via market based investments and then in retirement sell off those assets to generate income.



For example, to reach your retirement goal you will need $1m in investable market based assets.  This forces you to play in the Wall Street casino as if no other retirement model exists.



We've all seen the commercials with people walking on top of a green arrow with a growing dollar amount.  These commercials focus your attention on trying to get to an imaginary retirement number.  We're literally being conditioned to think a certain way over and over again to the point this has now become "GroupThink".  If everyone else is doing it, I should be doing it, too.



This retirement model is flawed because it’s not the amount of assets that is important.  I repeat, 



It’s not the amount of assets that is most important



Certainly, you need to have a solid balance sheet heading into retirement but the most important number you need to know is the amount of income you'll have for all years in retirement.   



But none of these online financial software models available to the public can provide a guaranteed income number.  Instead these platforms leave you on your own or relying on your traditional Wall Street based advisor to figure out just how you're going create a retirement income.  At best, you're given a guess.


 

Let's quickly examine the idea and importance of a pension.  Pensions provide a guaranteed payout for as long as you live.  This is ultimately what people want even if they aren't willing to admit it.



Consider this scenario:  If you had two job offers from two identical companies (same role, income, etc) and the only difference between the two job offers was company A offered a 401k and company B offered a pension, which offer would you take?


 

Obviously, you'd want the security of a guaranteed income to enjoy your retirement with.  A 401k has no such income guarantees.  You have to figure it out on your own.


 

In order to get retirement guarantees you want you have to move money into life insurance policies or annuities.  This is becuase only life insurance companies are able to provide guaranteed withdrawals rates and lifetime income payouts greater than the “safe 4% withdrawal rate” Wall Street recommends on their all market-based approach to retirement planning.  



That "safe" golden rule for withdrawals is now 3.3% according to Vanguard.  Academic pundits like Wade Pfau, PhD. From The American College of Retirement now say the recommended withdrawal rate is actually 2.8% due to market volatility and historically low bond rates.  


 

Essentially, that means instead of $40,000 of annual income on $1,000,000 in assets now only produces between $28k-33K a year, and you STILL have the risk of running out of money at some point if you live too long!



In nealy all cases I'm able to create as much as 50% more income on a guaranteed basis by utilizing life insurance and annuity strategies compared to the default withdrawal plan Wall Street recommends.



Does this mean all money should move to life insurance companies?  Certainly not.  



But the reality is this.  There's needs to be a marriage between Wall Street and the Life Insurance industry if you want to have any degree of certainty in retirement.  


 

Here's your big takeaway:  



How much guaranteed income do I need and how can I get it with as much efficiency as possible?  



Knowing your income number will determine what steps need to be taken in building out a well thought out retirement plan.  Without knowing that number, chasing an imaginary number is illusive and perhaps that’s the point with all these financial platforms.  Wall Street wants people on that perpetual hamster wheel so the less you know about creating a pension like income for yourself, the better it is for them.



Do you need helping know your number?  If so, let's talk.  You can schedule time here:  


www.IBC.guru



 

Thank you,

 


John Montoya






Sunday, December 13, 2020

IBC Dilemma: Pay Additional Premium or Re-Pay Loan

 


IBC Mailbag: "John, I have a policy premium due and I'm wondering should I pay the total annual premium as scheduled or use the excess premium for the PUA rider to instead repay the loan on the policy? Please advise."


Here's a fork in the road for IBC policyowners eventually arrive at whether they have one or multiple IBC policies.  While there's no wrong answer here, I think creating a list of priorities helps answer the question best for your situation.  Here's my take on this IBC dilemma.


First Priority:  Premium Contributions


My rule of thumb has always been to contribute the premium (Base and Paid Up Additions) first.  Here's why.  


First and foremost, the ability to contribute premium is closed ended meaning there is a finite time to make these contributions.  (Note: base premium contributions - AKA the minimum premium due - must be made each year unless exercising a 12 month "premium offset" option.  There is no carry-over or "catch-up" provision for the base premium.  Paid Up Addition's or PUA's are optional excess premiums that may have a limited carry-over provision depending on the life insurance company.  Only a few life insurance companies offer a carry-over provision from the previous years unused PUA's.)


Also, the sooner one makes a premium payment, the better the policy is going to perform in all facets.  Keep in mind that once money goes into a Whole Life policy as premium, it is guaranteed to grow from that point on.  


And the benefits to making premium payments go well beyond the obvious:  more access cash values, more death benefit protection.  


Where else can you save money and then use that money elsewhere without interrupting the compounding growth?  Infinite Banking Whole Life policies are a financial unicorn!


If an IBC policy owner prioritizes repaying a loan before contributing premium, they are going to interrupt the compounding effect of future cash values.  Money can only compound if it's first saved and considering a Whole Life contract will be held for the entirety of one's life, the lost opportunity cost of compounding cash values and future death benefit could be absolutely huge.


Bill Lenderman, the late IBC practitioner and mentor to many current IBC professionals summed it up best: "You'll never be in a worse position by having access to cash."   ...so pay those premiums for as long as you can!



Second Priority:  Repaying Policy Loans


Loans on the otherhand are open-ended and unscheduled.  I've grown fond of saying over the years: "You can repay a policy loan in 2 month, 10 years, or never at all (if using loans for income)."


Policy loans, unlike bank loans, allow you to manage your cash flow to determine the best use of your cash flow.  


Here's another reason why you will want to prioritise repaying loans second.


I remember Nelson Nash talking about unexpected windfalls.  This windfall could be the result of an inheritance from a family member.  A windfall could also come from a work place bonus, or the sale of an investment.   The point is windfalls do happen, especially when you advance to using IBC policies loans to invest in real estate and business ventures.  


After receiving the windfall, then the question becomes: where do you park this windfall?


If you have policy loans that are outstanding, you now have the perfect place to warehouse that money without necessarily having to start a new IBC policy.  


Last reason why you should prioritise repaying policy loans second and it's simple, yet crucial.  


Before you ever take a policy loan, you should have a plan to repay that loan.  As Nelson would say: "Be an honest banker."


For answers to more questions like these, please contact me at www.IBC.guru


Best,


John Montoya











Wednesday, November 25, 2020

Lafayette Life Rolls Out Online Payments



Infinite Banking clients who have policies with Lafayette Life will be pleased to find out they can now make premium and loan payments online at www.LLIC.com when they login to their accounts.


If you have multiple policies, you'll be able to navigate online between all Lafayette policies.  This added convenience makes "becoming your own banker" aka the Infinite Banking Concept even more user-friendly.  


For those of you not yet familiar with Lafayette Life (they only work with experienced advisors so you likely won't ever see any fancy commercials), they have been a quiet leader in the IBC world since the early 2000's when Nelson Nash introduced the concept with his best selling book: "Becoming Your Own Banker".   They were the first mutual life insurance company that really embraced the strategy whereas other mutual companies initially shied away from advocating IBC.


The reasons were simple.  


There was unknown risk with encouraging policy holders to actively take loans with unscheduled loan payments.  Would policy holders be "honest bankers" as Nelson preached in his book?  Life insurance companies don't like taking risks but almost 20 years later, experience has shown policy holders to be both diligent and forthright borrowers to their policy loans.


Life insurance companies were also concerned about promoting a strategy "with the lowest death benefit" to their advisor/agent salesforce that encouraged them to take 60-80% reduction in pay with every policy sold.  Imagine your boss coming to you with a plan that would cut your pay in half and see how well that would go over...


Lafayette embraced both concerns head on and the results have seen their once tiny life insurance division outgrow their former headquarters in Lafayette, Indiana to where they reside now in downtown Cincinnati, Ohio.  


I had the pleasure of touring their HQ almost 5 years ago and was amazed by the efficiency of their operations.  You'd never guess the size of the company when you walk into their high rise building down by the Cincinnati riverfront.  


Lafayette Life has remained one of my top choices for Infinite Banking for a number of reasons.  Their Whole Life products are amongst the most innovative and flexible in the industry.  In fact, their competition has borrowed quite a bit from their product design over the years.


My favorite reason though for working with Lafayette Life is their accessability to friendly and helpful associates all the way up to executive management.  If I ask for anything, they are always willing to get on the phone and make my life as an advisor easier.  Of all the companies I've ever done business with, I have to give them the highest marks in the industry for customer service.  


And now with online payments life gets even easier for me and my clients who practice Infinite Banking.


If you have questions about Infinite Banking or would like more information about Lafayette Life as a choice for your next IBC policy, let me know.  You can always find time to connect with me here:  

www.IBC.guru


Thank you,


John Montoya