IPB 038: Income Planning Is a Lot Harder Than You Think

I know, when you see a title that includes “income planning” you begin to wonder… “Isn't this a podcast about life insurance?”

Yes, it is.

And we are talking about life insurance, annuities, etc. in the episode as we wrap up this discussion about income planning. But we felt like it was really important to give some context for that conclusion first.

So many times in our industry, people trot out solutions before they've accurately described the problem. 

In fact, that's something we see far too often…

People reach a certain age, have been earning a decent income for a couple or a few decades and they come to us with a “collection” of financial products. They're not entirely clear on what they have or why they have what they have.

And we are certainly not making light of this. Heck, I have more shoes than any grown man should ever possess and I can only wear one pair at a time.

I digress…

And we are certainly not making light of this. Turns out that actually putting money away (even if you didn't have any sort of cohesive strategy) is a whole lot better than doing nothing at all.

But what if you planned with the end in mind?

See, we (Brandon and Brantley) believe that the most prudent way to plan is to know where you are headed.

There's so much buzz today surrounding the phrase “passive income” and it's usually discussed in the context of business ventures that spit out money without the owner being actively involved in the day-to-day operation. I gotta say…that's a fantastic dream but that's a tough thing to come by.

What we mean by passive income is having assets that generate income with zero effort on your part. And the most stable assets that we've ever come across for that purpose are life insurance and annuities.

Now, I'm not suggesting that insurance products have the potential to provide you with the highest income possible, however, I am telling you that insurance products can provide a stable passive income for you. Insurance solutions are not meant for all of your money, but if you've done a good job of planning with the end in mind, they can help you provide a stable foundation for your retirement…whatever that may look like.

Hope you enjoy this episode as much as we enjoyed recording it. And as always, if you have any questions, please reach out to us.


2 Responses to “IPB 038: Income Planning Is a Lot Harder Than You Think”

  1. Seth says:

    Great episode, guys. I discovered your podcast a few weeks ago and have devoured almost ALL of your episodes. They have been really fascinating and have enriched my understanding of policy mechanics. I’ve been researching the IBC concept for the last 6 years or so, and I can’t believe I only just found your site. It’s by far the best overall resource on the topic. (I realize you aren’t IBC-ers, but compared to the rest of mainstream financial “wisdom” you are blood brothers.)

    Back to episode 38: I’d really enjoy hearing more specifics–ideas–for acquiring assets that provide passive income. Resources, books to read, real-life examples, etc.

    One question, though. In this episode you describe life insurance as an income-producing asset. I get the asset part, but isn’t the income-producing component only relevant for retirement income way in the future (for someone like me, in his 30s)? Life insurance doesn’t really work as an asset that produces income TODAY, in the way that real estate rental income would, right?

    • Brantley Whitley says:

      Hi Seth,

      Thanks for the positive feedback, it’s always great to hear from people who appreciate our efforts!

      Life insurance is an asset that has the ability to produce passive income. You’re partially correct in that it does require some time to function as such. However, how much time depends largely on how much capital you have to commit to your policy and how much income you need/want at a point in time.

      If you want to use real estate as an example, you’d have to know what sort of reasonable return you can expect on an annual basis after you factor in taxes, repairs, and vacancies. My problem with real estate is that people typically make return projections that are far too idealistic. Now, I’m not saying that rental real estate is a bad idea. In fact, it can work really well if you buy at the right price, in the right neighborhood, get the right tenants, have favorable eviction laws, reasonable property taxes etc.

      That’s a lot of things that you have to get right. Again, not saying that makes real estate bad just that you need to make sure that from a perspective of assessing risk, you account for all of those things.

      With life insurance things are far more simplistic. If you buy a policy from a great company, that is properly designed by a skilled agent that has experience in designing a policy focused on cash accumulation, there’s little to no effort required by you after the fact. Yes, there are elements of policy management that require attention but no where near the management of real estate. Life insurance is truly passive. It will produce a result without active work from you.

      Real estate (unless you’re just buying shares of a REIT) is not passive. I personally know several people who own quite a few rental properties and it is definitely not a passive endeavor. And for them to produce great returns, they have to aggressively employ the use of leverage. That is obviously an added risk. I’m sure there are many who disagree with my assessment and that’s okay. Those people can start their own podcast or blog to point out how wrong I am.

      Thanks again for reaching out!

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