If you would like to say good-bye to putting all of your money at risk in the stock market and potentially getting a significant reduction in retirement cash flow due to rising taxes, then building some of your wealth beyond Wall Street may make sense.
Wealth Beyond Wall Street allows you to bypass Wall Street, for a portion of your money, and shield yourself from the possibility of rising taxes. This will allow you to still have protection from market volatility and tax increases so you could create more cash flow now and in retirement.
Wealth Beyond Wall Street encourages the use of methods such as entrepreneurship, real estate, and investing in yourself to grow your wealth outside of Wall Street. One of the main strategies uses a little-known max funded version of a financial tool that protects against market volatility, grows in the good years, and could provide you a supplemental tax advantaged cash flow in retirement lasting your entire life. The strategy is Indexed Universal Life Insurance.
That’s right. This method uses Indexed Universal Life to help you achieve your financial goals without worry of market volatility and rising taxes. This isn’t the type of life insurance you hear famous radio talk hosts talk about..
We build it a little differently. The conventional way usually includes excessive fees for most people and big commissions paid to greedy insurance agents. Of course, any plan has costs and fees; however, our goal with this method is to reduce those to the lowest guideline level so we can maximize the amount of growth in the insurance policy.
Over time, this could be one of most profitable assets in your portfolio if built and used correctly. The owners of Wealth Beyond Wall Street have over 6 polices between them. It is one of their favorite financial tools and it is helping them achieve their financial goals. If you keep reading, you can discover some of the major benefits of this method.
If you listen to the TV and Wall Street “experts,” you’ll hear a lot about maxing out your 401(k) and IRA contributions in order to get a tax deduction and grow your money tax-deferred. Of course, it makes sense for some to have a 401(k). Yet, could it also make sense to use a portion of your money to diversify against market volatility and rising taxes?
Knowing taxes are likely to be higher in the future, why would you trade in a lower tax rate today for a future rate that could be much higher when you need the money most? Even if taxes don’t go up, deferring taxes to the future can cost you 3 to 5 times more at withdrawal than you save by getting a tax deduction during your working years.
Simply look at the math. Here we’ll use a hypothetical example to compare paying taxes today, and creating tax-advantaged retirement cash flow, to deferring taxes to the future:
In this example, let’s say you contribute $5000 per year for 30 years. With a 401(k) you paid no taxes on that money because you got a deduction. On the other side, you would have paid tax at your normal income tax rate, let’s assume 33%.
With the Tax-Advantaged life insurance policy you would pay $49,500 in taxes ($1650 per year x 30 years).
In this example, when you retire you’ll have $498,300 in the tax-deferred plan or $333,900 in the tax-advantaged life insurance policy.
You’re probably thinking, “This is a no brainer—I’ll take the tax-deferred plan with the bigger balance.” But there is a catch. Let’s say you take out $73,000 a year to live on during retirement. Assuming your money is still growing at 6.5%, you can take $73,000 a year for nine years. However, each year you will have to pay $24,090 in taxes on that money.
That means you could end up paying $216,810 in taxes vs. $49,000 with the tax-advantaged life insurance policy.
And this assumes taxes never go up.
That is why it might make sense for you to diversify against the potential of rising taxes using a tax advantaged indexed life policy. It is definitely not for everyone, but more and more people are starting to use this strategy every year due to the benefits.
One thing you will hear from the media today is the importance of growing the biggest nest egg. Now one hand, the more money you can save the better.
On the other hand, more money doesn’t always mean you will have enough to last you throughout your life. Many wealthy people will tell you it is not only about creating the largest next egg.
It’s also about creating cash flow.
In fact, INCOME, or ”cash flow,” is the new and correct focus for true financial independence.
When I started my business I had an income goal to make $200,000 per year. At the age of 21, this was a big number for me and I worked hard to achieve that.
We believe there is a fundamental fallacy in Wall Street teachings that lead people to the conclusion they should be focused on a nest egg number.
It’s called the 4% rule.
Let’s say I do have a 1million-dollar nest egg, and I want this to provide an income for life… (1 million may be well out of reach for many Americans, but let’s take a best case scenario and assume we’ve got a million to work with).
The 4% rule says I should be able to take 4% of your nest egg in income and have it last for the rest of my life.
Well, 4% of $1,000,000 is $40,000. I still have to pay tax on this because it’s more than likely in a 401(k) or Ira. Assuming tax rates are the same, I’ll pay 15% federal and about 6% state, unless you live in a state with no income tax.
That puts me at about $31,600 or just over $2600 per month. For many Americans, this wouldn’t be all that attractive.
Now what happens if the $1,000,000 takes a 30% hit during a market downturn during my retirement? Now I’ve got $700,000. Now my monthly income is down to $1843. Maybe I’m a bigger spender than you, but that’s just not going to cut it for me.
That’s why the 4 percent rule could be broken.
The reason the 4% rule doesn’t work is because of something called “The Sequence of Returns.”
Your nest egg and retirement income can vary greatly depending on whether the market goes up or down in the first couple years of your retirement. For example, if you take the exact same sequence of returns, with some ups and some downs, starting the sequence with your withdrawals in an up market (High early returns), your money would last 37 years. If you started withdrawals in a down market (low early returns), your money would only last 24 years.
This means your retirement could have run out 13 years sooner, just by the luck of the draw.
So following the “Nest Egg” retirement strategy, at this point you are simply “hoping for the best”; hope is not a strategy.
If you are one of the unlucky ones to retire in a down market, it could cost you.
When I realized this, it helped me make a major paradigm shift in my thinking. My goal was no longer to just make a certain “income level”; it was to generate a passive income that my family is able to live on should the worst happen.
So when I discovered the tax-advantaged life insurance policy using the index strategy, I was excited because I wasn’t hoping anymore; I had peace of mind that my money wouldn’t be lost when the market went down, could grow tax-deferred, and could provide me with a supplemental tax-advantaged cash flow
If you do research online, you will find a lot of negatives on this method. Here is the shocking truth: most of them are true…if you build this plan incorrectly, don’t fund it correctly over time, and don’t use it properly.
If you would like to see how a one of these financial tools could benefit you…
Market volatility seems to be more present today than ever before. In the past 15 years we have had two of the biggest downturns in history. With how connected the world is today, volatility is most likely here to stay.
Now some people say, “When you are young, you can afford to take losses because you have time to recover.” They claim that losses when you are young are okay; they don’t hurt as bad as they do when you are older.
Losses on all of your money can hurt. Losses can be especially costly the younger you are because of the opportunity cost. You lose the ability to have that money working for you for the rest of your life. Ouch!
Take a look at the TRUE cost of a $50,000 stock market loss. (HINT: It’s not just $50,000)
Let’s say you lose $50,000 in a market downturn when you are 45 years old. And, let’s assume you could have averaged 7 percent over the next 20 years (which you can in our strategies).
How much did you really lose by the time you retire at the age of 65?
That $50,000 loss really cost you $193,484.
But that’s not where it ends. Because you still have another 20 or so years to live in retirement.
Let’s assume you live to age 85.
That $50k loss just cost you $748,722 dollars.
Your loss didn’t just cost you $50,000. It really cost you three quarters of a million dollars!
Can you see why Warren Buffet’s rule #1 is “Don’t Lose Money”?
We encourage you to beware of this type of thinking: “Don’t sell! Be patient and your money will come back.”
This type of thinking promotes the idea that, after market crashes, if you just hold on, you will eventually “recover” your losses…
…that the money you lost will magically show back up in your account.
This may make sense for a portion of your money. We encourage you ask if it might make sense to diversify a portion of your money to protect against market volatility and downturns.
When you have a loss, take our $50,000 in this example, it’s gone. And it’s not coming back.
Wall Street doesn’t put a deposit back into your account. If your account does recover to the amount before the loss, it happens because the principal left in your account grew enough to replace the amount lost. Recovering significant losses can take anywhere from two to six years on average.
Often people celebrate getting back to even like they won the lottery. Talking heads on TV pat each other on the back and celebrate the “new market high”. If your money was really growing, you’d be experiencing new market highs virtually every month and year.
Getting back to even is better than continued losses, but the real question is how much more money would you have today if you didn’t lose the initial principal in the first place?
(Keep in mind, people often continue contributing to their accounts during the “recovery” period. They mistakenly think they have recovered their losses, when they themselves have contributed substantially to the recovery.)
Click the button below to get a free, no obligation blueprint where you’ll discover a unique strategy that gives you the potential for double digit gains and never losing in another stock market crash.
Every person arrives at certain moments of truth in their lives. For Ethan it happened when a large portion of his money got lost with the decline of the stock market. He also saw his parents retire with a healthy nest egg, but quickly had their retirement dreams dashed… all due to being tied with the majority of their money in stocks.
Since then Ethan found a better way and has devoted himself to get the message out about the safety and security of little known and underutilized tools that could help millions of Americans.
Ethan is happily married to his wife Erika, and has three wonderful kids: Zachary, Zoe and Xander.
Brett Kitchen is the best-selling author of Safe Money Millionaire and author of 4 other books.
He is president and CEO of 2 multi-million dollar companies. His mission is to help Americans change the way they save and invest their money to overcome the four enemies of wealth, so they can achieve freedom, wealth and independence.
His true love is his wife and three kids…and water skiing on the ski lake.
We are dedicated to helping American families change the way they save and invest so they have control of their money, independence, and financial freedom.
Disclaimer: You understand it to be an expression of opinions and not professional advice. Wealth Education Group DBA Wealth Beyond Wall Street team (Brett Kitchen and Ethan Kap) do not endorse & recommend stock investment or make claims for providing exponential growth opportunities to its users. User is solely responsible for use of any content and thereof understanding of the book/material provided here.