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Tax Free Retirement Income? (part 2)

Posted by Larry Jones on Mar 18, 2021 9:30:00 AM

In the last post

I spoke about the use of cash-value life insurance to grow wealth with very little risk to principal, a very competitive rate of long-term growth, and tax-free withdrawals through the use of policy loans. What's not to like?

How is this accomplished? Through the overfunding of your policy. Let's say your monthly premium is $100. What if you contributed $1000? Universal life policies are designed to allow excess contributions. Now...a word of caution here: a few years ago the IRS caught on to this concept of insurance policy overfunding, for the purposes of avoiding taxes, and set some rules (mainly the 7-pay rule, which I won't go into here) to prevent the abuse of these tax rules. Basically, if a policy violates the 7-pay rule, it is then designated a Modified Endowment Contract by the IRS, and the tax advantages largely disappear. However, the 7-pay rule is very generous, and overfunding of policies can still be done to a high level without creating a MEC. This is why you want the help of an advisor to avoid making a tax mistake that can bite you when you begin to take distributions.

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Topics: Retirement Income

Tax-Free Retirement Income?

Posted by Larry Jones on Mar 16, 2021 9:30:00 AM

In the last post I spent

some time describing the benefits of supplementing your retirement income with cash value life insurance. My favorite is Equity Indexed Universal Life. I believe that, for a young person, these products deliver the most growth over time with the least risk. But there's another aspect of these solutions that I'd like to talk about- the tax benefits.

I heard a story about an insurance agent who was up against a stockbroker in trying to win the business of a client. This person had a certain amount of money to invest, and he had approached both of these fellows to prepare illustrations of future results. Of course, the stockbroker used an average rate of return north of 9% to calculate his, while the insurance agent was more conservative, using a 6% rate. As the two fellows presented their results to the client, the stockbroker was beaming. His future values were nearly 20% more over the time period. It was clearly, to the broker, no contest. Until the insurance agent interjected to the client, "Oh, I'm sorry. I didn't know that we were supposed to have to pay taxes on this money." 

The agent got the account.

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Topics: Retirement Income

Wealth Accumulation: What the Wealthy Know That Most People Don't

Posted by Larry Jones on Mar 11, 2021 9:30:00 AM

What do the wealthy know that we don't?

When it comes to "old money" wealthy families in the United States, there are some similar traits to be observed in how they accumulate assets and pass them on from generation to generation. When it comes to wealth accumulation, I believe the number one secret that they have is this: They know how to turn time into their ally rather than their enemy!

Did you know that the average mutual fund investor earns only 3.83% (Dalbar Study 2010)? Then those earnings are taxed at a greater rate than they need to be. At death, even more of those assets disappear into the government coffers. Time has become the brokers ally, or Uncle Sams, but not his.

Now let me ask you a question.

If you knew that you had all the time in the world to accumulate assets in your estate and for your family, would you do anything differently?

The wealthy have learned ways to make time their friend, and to use it to grow their assets, and to pass them along efficiently to the next generation.

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Topics: Wealth Accumulation

Financial Services and the Busy Professional

Posted by Larry Jones on Mar 9, 2021 9:30:00 AM

We may be the most stressed out generation in history!

The statement above may be a little over the top. After all, probably nobody reading this has ever been kidnapped and sold into slavery, or watched half of the population of his city die of the plague.

But having said that, we are a generation on information steroids. Our grandparents embraced new "time-saving" appliances, such as washing machines and toasters, microwave ovens, etc. With all of the things we have to help us in our work we should be awash in leisure time. But is that the case with you? Certainly not with me.

Today, I'm not so sure we're not a slave to our devices. E-mails, tweets, and text-messages scream for our immediate attention. Our social life consists of wierd virtual friends whom we'll never meet in person, and really know nothing about. Responsibilities are endless, and especially if you're a working professional, the hours in the day don't seem to be enough.

Trying to keep all these ducks in a row can be too much. Many times the management of your finances is a chore that is always pushed out to the future.

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Topics: Subscription Services

The Dreaded 401(k) Rollover

Posted by Larry Jones on Mar 4, 2021 9:30:00 AM

Have you recently changed jobs?

If so, you may be wondering what you should do with your old retirement plan. Over the years you have accumulated quite a sum of money and now you are no longer with the company. Or you may still be there, but are just unhappy with the investment results that you're getting. Can you move that money somewhere else? Should you?

 The answer is: it depends.

It's possible that you're being approached by financial professionals who are happy to tell you what to do with that money. Here are some things that you need to know before making a decision on your 401-k rollover.

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Topics: Retirement Plan Rollovers

Some Critical Estate Planning Mistakes

Posted by Larry Jones on Mar 2, 2021 9:30:00 AM


Your Legacy: Does it matter to you?

I'd like to take a minute to discuss how your estate plan and your legacy are tied together. How will you be remembered by your children and your community? 

If you're a high-income earner, the way that you arrange your affairs for the day when you are no longer in the picture may make a great deal of difference to those that you leave behind. 

You have worked hard all of your life. It was you that studied for exams, rose at the crack of dawn, and sacrificed your time and energy to accumulate the assets that you have today. You are where you are today because you've worked very hard to be. 

Don't let a government that doesn't even know you or care about your family take 40-60% of your assets from your family when you die.

Proper estate planning will ensure that your positive image survives intact. Here are 5 absolutely essential steps you should take to protect your legacy.

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Topics: Estate Planning

When it Comes to Investment Advice Are You Getting Your Moneys Worth?

Posted by Larry Jones on Feb 25, 2021 9:30:00 AM

Do you remember how you felt in 2008 watching your investment portfolio decline?

Most folks do. It wasn't a happy time, especially for retirees. Many saw their portfolio's go south as much as half it's value! 

Why do we do this to ourselves?

Is this the only way to grow assets and have security during retirement? Absolutely not!

I'm always amazed when I meet folks in their 70's and 80's who still have 80% of their portfolio in high risk stocks. Inevitably, they tell me, "well, where else am I going to get growth?" I'd like to go on record here and now by saying that, in my opinion, a 70 year old retiree needs to be more concerned with income than growth. That's why my first goal, if possible, is to reproduce the income you had when you were working in a guaranteed income stream that isn't dependent on the market, or subject to loss. That's happiness! Then, once that base is covered we'll try to grow the remainder, and perhaps take a little more risk. But the Wall Street system doesn't want you thinking that way.

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Topics: Investment Advice in a volatile world

Common Retirement Income Issues for Women

Posted by Larry Jones on Feb 23, 2021 9:30:00 AM

Why Women are Special:

James Brown sang "This is a man's world. But it wouldn't be nothing without a woman or a girl." It's debatable whether it's still a man's world in 2021, however, when it comes to financial planning for the fairer sex, there can be some unique challenges. In my parent's day planners were accustomed to formulating financial plans primarily for families. Divorce and cohabitation was much less common. But today, nearly every situation is unique, and any planner that doesn't take the 21st century into account may be missing things.

There are a number of financial issues that are unique to the X chromosome dominant person.

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Topics: Financial Planning for Women

Investment Advice: 6 questions to ask before choosing an advisor

Posted by Larry Jones on Feb 18, 2021 9:30:00 AM

Are you any better off than you were a year ago? 10 years ago?

Everyone remembers 2008. There was a nasty period from September of 2008 through February of 2009 where the value of the S&P 500 drew down over 50%! Many who were on the verge of retirement had to rethink their plans, while others who were already retired discovered that they needed to take a much larger percentage of their nest-egg to keep the same level of income.

Let's fast-forward a bit. The first six weeks of 2016 was the worst start to a new year in the history of Wall Street. 4th Quarter 2018 was very ugly. My opinion is that most investors have no idea as to how much risk their broker is exposing them to. When it comes to investment advice, are you happy with the guidance you've been getting? In the interests of prudence and common sense, I'd like to suggest some questions you should consider.

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Topics: Investment Advice in a volatile world

Would a good asset protection plan make you a better Doctor?

Posted by Larry Jones on Feb 16, 2021 9:30:00 AM


Want to take a guess at what the number one worry of Physicians is?

When a CPA makes a mistake it may result in the client being audited. When an engineer makes an error, it's usually something that can be corrected. But when a doctor makes a mistake, it can result in death for his patient. This is the greatest fear of every Physician. To make matters even worse, lawsuits against the medical profession are running rampant. Why is this so?

The general public believes that doctors live on easy street. While it's true that physicians usually make an above average living, it's also true that they have some significant worries that most of us don't have. Salaries for doctor's have declined significantly in the last ten years, and surveys have indicated that the number one concern facing this group of professionals today is what to do about frivolous and runaway lawsuits, along with high jury awards that can potentially wipe out their personal wealth. Now that's a concern that most of us don't have.

But does this worry affect patient care?

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Topics: Asset Protection: Freeing Doctors to Help Patients

What you don't know can hurt you!

As a fiduciary I am required to always act in your best interests, and as a professional planner, it's my job to be familiar with all types of possible solutions and financial vehicles. In short, I have no interest in selling any particular product or any affiliation with a particular company. I work for my clients.

Are you:

  • concerned that your tax bill is too high?
  • tired of watching your nest egg decline by significant amounts every 5-7 years?
  • wishing you could find more free time?
  • looking for ways to help protect yourself against litigation that could destroy all you have worked for?
  • worried that Uncle Sam is going to enjoy your retirement more than you are?

If any of the above describes you and you'd like to get a question answered then just click the button below and we'll be in touch.

Let's Meet!

p.s. we have the ability to meet virtually regardless of your location! Give us a shout!


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