Thursday, November 5, 2009

The Coming Decimation of Your Retirement Plan

(updated October 6, 2020)

Are you planning to retire soon?  Are you already retired?  Perhaps you're a millenial with decades to go before you can even think about retiring.  No matter whereyou are in your retirement planning, I'd like you to consider for strongly the choices you have to either safeguard what you've currently accumulated for retirement or plan to accumulate.

If you only have money in retirement assets like a 401k/IRA or receive a pension/SSI check, you need to understand the danger you're in by putting all your faith in Federal Reserve Notes and politicians who collect votes by promising benefits from programs that are underfunded and bound to go bankrupt in their current setup.

This should come as no surprise.  Our government has been playing kick the can down the road for decades.  The time is coming soon though, perhaps in the next decade, when the dollar will be further devalued and those planning to retire with 401k/IRA's will be wiped out by the combination of dollar devaluation and rising taxes.

Those on fixed pension and Social Security incomes will be wiped out, too, as the value of their monthly paychecks become marginalized thanks to unchecked printing of money by the Federal Reserve, increasing budget deficits, and as more people start collecting money from social welfare programs rather contributing to them.  On this last point, this is already the case.

The interest payout of the national debt ($27 trillion as of this writing) and the payments of future unfunded liabilities promised to you by Congress is unsustainable. To see our current debt status and unfunded liabilities go to USDebtClock.Org.

The truth is the facts presented by David Walker, former GAO chief (the nations accountant) are accurate, frightening and a call to action. If you have never heard of David Walker I strongly urge you to Google "David Walker, 60 minutes" and listen to his message.

The facts are, in spite of what you hear from our legislators, our current retirement programs including Social Security, Medicaid, Medicare parts A, B and D cannot continue in their current forms. There is not enough money to sustain them and the amount of tax increases and borrowing it would take to continue them would not only bankrupt the country but eliminate America’s the preeminent financial center of the world. 

Raising the taxes of the top 5% of the highest income earners to 100% and taking 100% of the profits of America’s top Corporation for the next 10 years would not even come close to solving the problem. In fact, it has recently been published that if 100% of every American’s wealth was confiscated and used towards these programs there would still be a huge deficit and need for more borrowing.

You don't need a Wharton business degree to know we cannot continue down the current path. The only two ways to solve the problem is to cut benefits or reduce the number of people receiving those benefits. Since cutting benefits would be political suicide, reducing the numbers receiving full benefits is the probable path. Reducing the number of beneficiaries receiving full Social Security and Medicare payments can be done in a way that politicians can say that they are living up to the promises made in the past.

Here's how we believe these programs will work in the future. Social Security benefits and Medicare subsidies will become needs based. What that means is only those who truly need them will get them. It will be based on your ability to pay your own way. By making the programs need based, the masses (those that didn't save for their retirement) will be taken care of and will still vote for their local politicians. As for you, the members of the "collective wealthy" (you didn't know you were called that did you?) will get just enough from the government for politicians to say that they're taking good care of you. 

The fact is that Social Security is already there by taxing your benefits according to your income. If your Social Security benefits are being taxed, you are not receiving the benefits you were promised but your neighbor who did nothing about planning for his future retirement receives the full benefit promised because his benefits are not taxed.

You are part of the "collective wealthy." You are part of the group of citizens who saved and invested for your future and that of your family. You have accumulated over $17 trillion dollars in IRA, 401(k), 403(b) and 457 plans (these are Qualified Retirement Plans). 

The government already forces you to take withdrawals from these accounts when you reach 72½. These payments will be counted against you for purposes of calculating your Social Security benefits and Medicare premiums in the future. This helps to bring the overall cost of the programs down and the politicians cannot say they reneged on their promises. It's called "spin, win and get re-elected". The politicians know that trillions are available and they are coming after it. Many see it as the solution to an unsolvable problem.

All the income from Qualified Retirement Plans are reported on your tax return when you take withdrawals and the total amount in your plan is reported to the IRS each year whether you are retired, taking withdrawals or not. The IRS knows you have the money and they know how much! Congress has the ability to keep increasing tax rates as a way to help address a problem Congress created in the first place.  

This will happen to you because you followed the crowd and listened to traditional financial advice telling you how you should be maxing out your 401k and IRA plans. 

In episode 20 (to be released October 7, 2020) of my podcast, www.TheFifthEdition, my colleague and I touch on the concerns many of you have about hyperinflation, pandemics, and the economy.  

One of things that you need to be doing is creating a financial bunker for your wealth.  401k and IRA plans are the not the best answer.  Remember, these are Qualified Plans created by Congress... the same people who created the mess.  When the people in charge are proposing a solution to a problem they created, you should think twice about following the crowd.

If you'd like to find out how me and my clients are taking action to secure our financial futures, schedule time in my calendar here:

Thank you,

John Montoya

Monday, September 28, 2009

The Benefits Of Paying Yourself Interest

All of us borrow money...even when we pay cash we are financing the purchase because the cash we spent can no longer work for us and earn money .

The price we pay for this is interest. Money we pay out for the privilege of using the banks' money for a space of time. That money that we earned is gone forever, never to return to us. Our income and lifestyle are reduced by this amount. But, it does not have to be...

The average American is spending 1/3 of what he earns after taxes on interest.

What, you say? How is that possible? The banks and other lenders have convinced people that they are the only logical, cost-effective way to borrow money. A personal bank is a way out of this tragic cycle.

That's right! Now there is a monetary strategy that allows you to become your own bank, paying yourself the interest that was previously lost permanently. Keeping that money so that it can be used again and again. Because...

It's not how much you earn...It's how much you keep!

WHAT could:

  • Turn your debt into personal wealth and tax free income for life?
  • Recapture the entire purchase price of everything you finance, business and personal?
  • Pay yourself the interest you now pay to Banks, Credit Unions, and finance free?
    It could be a lot of money!
  • Have your offspring gain access to a family bank that could finance their houses, cars, and anything else they need? Without ever borrowing from a commercial bank?

YOU WILL...Learn how to:

  • Create Asset Protection...INSULATE yourself from lawsuits and creditors.
  • RECAPTURE and leverage INTEREST AND PROFITS that are now paid to your bank and finance company.
  • Harness the power of DOUBLE COMPOUNDING INTEREST for a secure financial future.
  • WIN the money game - the amazingly SIMPLE strategy that can work for anyone.... including YOU!
  • Turn your life insurance policy into your most PROFITABLE asset...WHILE YOU ARE STILL ALIVE!
  • Create a FINANCIAL LEGACY that will be renewable and sustainable for your children.
  • Pay for and recapture the ENTIRE cost of college education for your kids.
  • Save a fortune on your home mortgage.
  • Make sure every dollar deposited in your bank leaves the tax system FOREVER… and how every dollar earned within your bank is TAX FREE.


It's not how much you earn...It's how much you keep!

Email: or call (800)208-6141 to learn more.

Sunday, September 27, 2009

Buy Term and Invest The Difference?

There are consumers and financial planners who believe that buying term and investing the difference is the best way to buy insurance. For this particular crowd, I have a few more recommendations that fit with this strategy. Here are some other ways to save money and invest the difference. A Honda Civic instead of an Acura, Top Ramen instead of a sirloin steak, a bus ticket instead of airfare, an economical minivan instead of a luxury SUV, reading at the library instead of purchasing new books, and don't forget about brewing your own coffee instead of a trip to Starbucks.

As you can see, there are many ways to save money. However, when it comes purchasing life insurance I suggest you stick to the old adage: cheaper isn't always better. In fact, when it comes to buying term insurance, you'll be surprised to learn it's actually the most expensive option when looked at from a long-term perspective as the cost to renew coverage rises to unaffordable levels as you get older. Most people will assume that you don't need life insurance as you grow older and especially if you've "invested the difference". This is a common fallacy though. Don't forget that when it comes to buying term and investing the difference, human behavior will often get in the way. Rather than investing the difference, the greater amount of cash at hand will most likely go towards a new car payment, a dishwasher, vacation, or more dinners out. If the difference does happen to be invested, it can be prone to stock market loss, capital gains, and/or income taxes which drastically reduces the rate of return. For a real life example, check your 401k statements from the past year. Now imagine Uncle Sam taking an additional 25%-33% if you had to withdraw money for income! OUCH!!! And if you live in the great state of California like I do, don't forget about your state income tax of 9.3% of any income over $44,000! (Are you starting to understand why more than half the money you earn goes toward paying taxes and interest? Learn more at

When you're analyzing the right type of insurance, it is important to buy the type of insurance that is appropriate for your future needs. If income from life insurance for survivors is truly a long-term (i.e., lifetime) need, the lowest net cost insurance, and the most stable investment, is permanent cash-value life insurance. Cash-value that builds in a permanent policy grows tax-deferred and withdrawals to the basis of premium dollars paid into the policy as well as policy loans are tax-free. This makes permanent life insurance a safe and alternative way to build a tax-free, long-term savings vehicle that plays a vital role in developing a successful financial plan.

Most people think of life insurance solely for it's death benefit. You may also be surprised to learn that a permanent cash-value policy provides living benefits in the form of tax-free withdrawals and tax-free policy loans at any age. This type of flexibility cannot be duplicated with any other financial product other than a Roth IRA (which allows for tax-free withdrawals after age 59.5). However, with a Roth IRA, you are limited in the annual amount you can contribute and as your income increases, you may become ineligible to contribute. Furthermore, most investments within a Roth IRA tend to be speculative (stocks, mutual funds, bonds) which have no protection against stock market loss. In comparison, cash-value policies except for variable universal policies, bear no market risk and is secured by the legal reserves of the life insurance company. To be fair, there are no home runs like with the stock market. However, slow and steady combined with tax-favored treatment can provide similar returns when adjusted for taxes and inflation compared to a diversified portfolio of securities, but with none of the stock market risk. I bet you can sleep safer at night knowing your money is protected, right?

Finally, the vast majority of death claims paid are those where the policy was permanent and the insured was older than 65. Since a term policy is designed to protect for a specific period of time of life, there is no guarantee a death benefit will be paid. In fact, the likelihood of a term policy paying a death benefit is minuscule. The percentage of term policies that pay a death benefit range from 3-7% whereas permanent life insurance pays a death benefit 100% of the time when kept to maturity. For my family, I like those odds.

If it is your goal to build long-term wealth that you can enjoy while still living and guarantee to leave a legacy to your loved ones, it is recommended you compare the true costs of term vs. permanent insurance and decide what is best for you. It is my opinion term life insurance is best utilized to protect a family on a tight budget and/or to satisfy a short-term need for protection of 15 years or less.

For more information on the type of coverage that best suits your needs or for an audit of your existing life insurance policy, email or call (800)208-6141.

Friday, September 11, 2009

Be Your Own Bank

I’m sure you’ve heard of the saying by Albert Einstein: “Insanity is doing the same thing over and over and expecting different results.”

So why do most of us continue to treat our financial plan the same way? Maybe we make minor adjustments (putting more into cash reserves), but for the most part, the strategy remains the same. To me, that’s insanity.

I'd like to personally extend an invitation to attend our latest presentation at our new office. Keep your checkbook at home…we don’t sell anything. We simply want to educate on a better way to ensure all of us don’t become a “retirement statistic” of failure.

Here’s what you will learn:

* Why the government created investment tools that favored tax revenue for them…not retirement planning for us.

* How you can eliminate the IRS from touching your future retirement money. That means untaxed retirement funds.

* Why capturing “transferred money” (money that you lose unknowingly and unnecessarily) is more powerful than any rate-of-return projection.

* Why lost “opportunity costs” (what the transferred money could have done for you if you were able to keep it) devastates financial plans and no feasible rate-of-return can make up for it.

* And finally, how this can be accomplished while your money grows every year, no matter what. Is that in your current plan?

If I can prove to you that my statements are true and accurate, then I’m confident you’ll wish you would have attended our seminar months ago. If you think that what I’m proposing is too far fetched, maybe you’re a CPA or CFP (Certified Financial Planner), then I challenge you to come and prove me wrong.

Best Regards,

John Montoya
CEO and Founder
JLM Wealth Strategies