The Troubled Road Ahead for 401k Investors.

1. Limited funding: Your 401k, SEP IRA, SIMPLE, Traditional IRA, Roth IRA and other qualified plans all contain IRS guidelines on how much money can be funded for your retirement.  Why?  Shouldn’t you be able to fund your retirement on your financial schedule not what the IRS says you can!
2. Participation Requirements: Just another obstacle companies face in providing retirement accounts which can be reduced and or avoided.
3. Unknown Future Tax Rates: If taxes are going to be higher in 20-30 years, why would you want to pay a higher tax rate on a larger balance in your 401k (tax deferred) or other qualified retirement account?
4. No Death Benefit: This is the most OVERLOOKED benefit and I can’t stress this enough!  Would your heirs rather have the small balance in your tax deferred account (then pay taxes on it) or receive a huge death benefit tax free?!  Obvious answer, yet so often overlooked!
5. Social Security Taxation: Upon withdrawal of your tax deferred investment money to supplement your Social Security income, you’ll trigger a HUGE TAX TRAP Uncle Sam has quietly set for you.  This leads to 85% of your Social Security income subject to taxation when you thought it was going to be tax free money.  Uncle Sam has major bills to pay and needs your retirement money.  Also, once the IRS guidelines for your “Required Minimum Distributions” (RMD’s) kick in, avoiding taxation on your Social Security income will be difficult to impossible.
6. Wall Between You and Your Money: Uncle Sam wants to make sure you don’t touch your (his) retirement money until he says it’s OK.  If you decide to access your money, get ready for a 10% IRS penalty and steep income taxes.
7. 100% Market Risk: If you’ve lost 50% of your retirement account in the past several years, it will take a 100% return just to bring your account back to even!  Using the investment rule of 72, if you make 9% each year (avg. of the S&P for the past 30 years), it would take you 8 years to get back to even!  Do you have this amount of time at any age?  The stock market making positive returns for 8 straight years is rare.
8. Negative Returns: This is part of #6 above, but is so significant that it needs to be highlighted.  A 25% loss requires 33% gain to break even; A 50% loss requires a 100% gain to break even; A 70% loss requires a 233% gain to break even!  Can you see how devastating negative returns are which quickly damage your ability to save and threaten the loss of your principal?  These examples define Warren Buffet’s rules of investing:  Rule #1: “Never Lose Money!” and Rule #2: “Never forget rule #1!”  Imagine if you were getting close to retirement age, say 65ish, and one of the above scenarios happened to your retirement account.  For example, your 401k lost 50% (like so many have in the past several years) and you now have to pay another 30% in taxes on the funds that you do withdrawal.  How many years do you think you could retire for?  You will probably never see retirement.  Don’t give Uncle Sam and Wall St. any more control over your future!
9. Fees: I’m talking 401(k) qualified plans here.  Fees are out of control within these accounts and they are so bundled and camouflaged within small print and meaningless words they are often hard to find and not even easily explained by the person selling them.  3%-5% per year is average (if you’re lucky) for plan admin, marketing, accounting, distribution, mutual fund charges and the list goes on.  These are compound fees too!  What you might not be aware of is you’re paying fees to market their plans to other corporations.
10. No More “Open Enrollment”: It’s “Open Enrollment Time”!  This is the biggest marketing tactic ever and the fact that people are buying into it is ridiculous!  The 401k Plan Administrator has “consulted with the mutual fund company Rep” (went to lunch and played golf!) and they’ve added 5 new funds this year that are designed to “keep pace with The Market”.  Haven’t we heard this before?  Wall St. is betting we’ll be lazy;  It’s time to take control of your own retirement!

Ginn Insurance consults with clients on the above issues and helps with 401k (tax deferred) investment alternatives that align with safety, flexibility, your best interest first and the ability to sleep well at night!  Contact us!  We’d enjoy helping you!

Access The Cash in your Whole Life Policy without Surrendering it!

Would you like to access the cash value in your Whole Life Insurance policy without surrendering or canceling the policy?  We can do this for you.  Depending on your situation, you can access up to 90% of the existing cash.  Contact us for details.

Bakersfield, California Life and Health Insurance

Ginn Insurance Services is located in Bakersfield, CA.  We help clients with their life and health insurance needs.  We are an independent company which benefits our clients greatly because we’re not limited to proprietary or “in house” products.  We’re able to shop the market for the best carriers and present these to our clients; Clients appreciate this because they know they’ll get the best coverage at the best price.
Contact us today to schedule an appointment.

We represent most all of the top carriers including Blue Shield, Blue Cross, Kaiser and others.
Search for your plan using the links provided.

Starting June 1, 2010, Blue Shield Medicare Supplemental plans will include a free gym membership through the SilverSneakers Program at 24 Hour Fitness Clubs.  Also, if you’re new to Medicare Part B, subscribers can save $10 each month on their Medicare Supplemental plan rates for the first 12 months.  Call Ginn Insurance at 661-333-1181 for details.