The Ultimate Retirement Plan Alternative

Yikes! It’s not so bad if your “error of judgment” means you picked the wrong brand of toothpaste or even the wrong resort hotel. But it’s mighty serious, indeed, if your error of judgment leaves you struggling to get by in retirement—particularly if your health (or the health of someone close to you) means you can’t go back to work.

What then?

According to AARP, those errors of judgment have left the majority of baby boomers believing they’ll be forced to postpone retirement. And half have little confidence they’ll ever be able to retire.

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“But I have done all the right things!?!”

If you’ve been doing “all the right things” financially, but are disappointed that you don’t have nearly enough in your retirement fund, do you think continuing along the same path will suddenly start bringing you a different outcome?

And how much is enough, anyhow? Is having $500,000 socked away going to do the trick? Even if you only need $3,000 per month to augment your Social Security check, $500,000 will be gone in about 14 years! Then what do you do? Sit home and watch reruns of I Love Lucy?

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The sad truth is that most families don’t have anywhere near $500,000 in retirement savings. In fact, the Federal Reserve Survey of Consumer Finances reveals that the typical household nearing retirement—people ages 55 to 64—has only $111,000. If a couple uses their $111,000 to purchase an annuity, those assets will provide at most only $500 per month!

That’s not even enough to buy groceries these days, not to mention paying for health care, heating, transportation, insurance, and all the other expenses of daily life. And the purchasing power of that $500 will decline over time, due to inflation.

But even more frightening is the fact that this paltry $500 per month is likely to be the only source of income they’ll have to supplement Social Security, because that’s all most people have.

The U.S. Senate Committee on Health, Education, Labor, and Pensions tells us just how bad the situation is: “After a lifetime of hard work, many seniors will find themselves forced to choose between putting food on the table and buying their medication.”

Government Controlled Plans are not the answer

The real problem is that 401(k) and 403(b) plans, IRAs, Roths, SEP-IRAs, and so forth, are all government-devised and government-controlled plans that in the long run don’t benefit you as much as they benefit the investment advisors who sell you the plans.

For example, tax-deferral—the holy grail of retirement planning—is not the magic bullet you may have been told it is. First, tax deferral is not the same as tax-free.

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Second, just about every financial expert—and virtually everyone we meet—believes tax rates are going up. So waiting to pay your taxes until the rates go up makes about as much sense as waiting to buy a new mattress until they raise the price. Plus, if you’re successful in growing your nest egg, you’ll only be paying higher taxes on a bigger number!

Third, is the issue of how you grow your money. Thanks to the multi-billion dollar lobbying efforts of Wall Street, the g