Retirement Planning - Social Security is a fact of life.  It doesn't matter whether I like it, whether I think it will "be there" for me, whether "I could do better with my own money."  It is here.  Until it is not, we must factor Social Security into our retirement plans to some degree.  However, I'm not willing to depend on Social Security for my own financial security.  Are you?  Once the necessity of Social Security has been addressed, how do we maximize other options that may be at our disposal?  One foundation is the company sponsored 401K.  If you are an employee of a 501c3 organization; a charity, a hospital, or a school, etc., then you probably have access to a 403b retirement plan.  Whereas most 401K plans offer some type of employer funded match, very few 403b plans do so.  That which you are about to read is contrary to everything you've ever read regarding these types of plans.  News Flash:  Over-funding your 401K or your 403b may be hazardous to your financial health!  "Excuse me?" you might think.  If you ask your CPA or your personnel department or your current insurance agent or your stock broker, "How much should I invest in my 401K?"  The answer is almost always, "Every penny it will allow!  You will be able to deduct all you invest from your current income tax, thereby saving you tons of money in taxes!"  What they don't tell you, because most of them don't realize it, is that they should add, "For a time."  Let's revert to Common Sense Thinking.  Be sure to review the bottom of the page, as well.

401K/403b vs. Roth.  Take a look at this picture.  The 3 columns represent YOUR money.  You own them all.  Uncle Sam says to you, "You may pay tax on all 3 columns, but you must pay tax on at least one of the columns."  Which column does your common sense tell you to choose?  Right; the smallest column.  Then why in the world do all the people you ask say, "NO!  Pay tax on the largest column!"?  They do say that, you know.  When you invest in your 401K or your 403b, you are able to deduct that amount from your current income for that year (Column A).  However, not only are you delaying the taxes on the principal amount, but you are also delaying the income tax on all growth (Column B)!  Therefore, when you retire, and if that $5,000/yr. at 7.3% has grown to $500,000 (Column C), if you only withdraw some of the $500,000 each year you will pay tax on that amount only.  But if you need some lump sums, or when you die (strategies exist in order to minimize this, but they do not eliminate it), you will pay income tax on all of it plus you may have estate taxes due.  So in effect, you chose to not pay tax on $5,000/yr. (saving some $1500/yr.) for the privilege of paying tax on $500,000 (as much as 70% of it) later!  Where does it make sense to delay a $1500/yr. responsibility ($45,000 over 30 years) in order to accept a $4,500/yr. tax responsibility ($500k at 6% withdrawal = $30,000/yr. income taxed at 15% = $4,500/yr.) up to a $350,000 lump sum tax responsibility?  ($500K upon death if you have other assets causing you to be in a 38% income tax bracket plus a 45% estate tax bracket = approximately 70% after off-sets).  In a simplified explanation, that's what your 401K or your 403b could do "for" you.

I have found that most people, once presented with the facts, would much rather pay the tax NOW (Column A), defer the tax during the accumulation phase (Column B), and then withdraw ALL AMOUNTS INCOME TAX FREE (Column C)!  Such a scenario is called a Roth IRA and some (but not many) employers even offer a Roth 401K!  Please contact me for more information.   

But, don't jump ship on your 401K/403b just yet!  If your employer is matching your investment by 35 cents or more for every $1 you invest, then GET ALL OF THAT YOU CAN GET...but NOT A PENNY MORE!  Stop your investment at the point that your employer stops his.  I don't mind delaying tax on my income and I can also delay tax on my employer's contribution, just as long as I GET TO KEEP ALL THAT IS LEFT OVER of mine and my employer's money!  Now that is Common Sense!

Roth Vehicle Choices.  Once you decide to limit your contributions in your 401K/403b because it makes Common Sense, what are your choices with regard to the different vehicles available?  "Where should I put my retirement money?"  Beginning in 1983, I qualified for FINRA (the old NASD) registrations that allowed me to sell investments to my clients.  I sold a bunch!  In January 2008, I froze that registration and I do not currently offer registered investments.  However, with well over 2 decades of experience in that arena, I have a good understanding of how most of the offerings that qualify as Roth IRAs work.  Today, I offer options to my clients that don't carry the market risk inherent in direct stock market investing.  That means that the vehicles I offer now do not have the full upside potential of direct stock market investing, but they also do not offer the downside risk either.  If you can accept that type of risk, interview a Series 7 registered representative with a FINRA member and enjoy the ride.  If you would like to learn of safe alternatives that allow you to participate in the upside of the market (participate means that you will receive some of any upside), but without one tiny bit of the downside, then please email me for other choices. 

 An Alternative Place For The Difference (between the whole life premium and the term premium for equal death benefit)  - What if you are well under age 59.5 and don't wish to tie up your funds?  What if you desire to become your "own bank" and have tax free access to your savings?  What if you want to get out and stay completely out of debt by financing all your purchases yourself?  What if you want to have a guaranteed minimum return and know, year-in and year-out, what your balance and income will be?  What if you want to have a system that is 150 years in the making... stand behind your savings?  What if you want to be able to pass your savings to your heirs 100% Income Tax Free, when you die?  If these ideas get your attention, please email your phone number to me at , along with 3 good times to return your call.  One of them is sure to work for me.