What is a Pension?

What is a Pension

Ah the Pension.  A long sacrosanct retirement vehicle known for its rigidity and stability.  The anchor that led many American's into a comfortable retirement.  That was, until the late 70's early 80's when a few pieces of legislation dramatically changed the retirement planning landscape and gave way to a new (and much cheaper for some people) focus to retirement planning.

We'll ignore all of that for a minute, and instead focus on what exactly a pension is, and then come back to why it has sort of gone the way of the dodo.

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Can Cash Value Life Insurance be a Substantial Retirement Vehicle?

Can Cash Value Life Insurance be a Substantial Retirement Vehicle

Following up on the Cash Value Life Insurance as an Asset Class post, I wanted to spend some time talking about how Cash Value Life Insurance  get's used for retirement and wealth accumulation.

Believe it or not, there's not a lot oversight when it comes to the financial services industry when it comes to what you can and cannot reasonably recommend as long as you don't violate the really big rules.  Like a real estate agent who suddenly turns into a financial and business adviser in order to convince a client to take a 10% haircut on their selling price because he or she wants to close the deal, financial advice can often be driven by someone's need to pay a mortgage, pay down a credit card debt, afford a vacation, etc.  And for the most part, sadly, no one cares.  It's not until someone kills a sacred cow that problems begin to arise.  Put a 65 year old's entire portfolio into midcap stocks, spread that sale around into different funds so as to avoid the sales load breakpoint, and do it all a few days before the dividend date and you'll really upset some people.  Those are concrete examples of big no-no's any compliance officer should be more than capable of thwarting.  These examples are a violation of suitability.  On the topic of cash value life insurance, and its place as a retirement vehicle, the question is one of suitability.  Is it suitable?

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How Come People aren’t Laying Dead in the Streets? Retirement for the Baby Boomers

How Come People aren’t Laying Dead in the Streets

If you've spent any time reading the financial press you'll likely notice that Americans are chronic under-savers and this spells bad news for retirement.  In fact, it turns out we're so bad we recently reviewed a lot of the ideals Alan Greenspan championed and it turns out he might not have been exactly right (or at least that's the current preveiling theory, I've always believed he's sharply sarcastic and often made subtle jokes while addressing Congress that went over most people's heads).  If you want “proof” that we're meandering up the creek without a paddle check here:

 43% have less than $10k for retirement 

The Great Risk Shift

Retirement Crisis Closes In On Baby Boomers 

Solving a Looming U.S. Retirement Crisis

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Whole Life Insurance Distributions, the “Whole” Story

Whole Life Insurance Distributions

Life insurance agents love to fight over meaningless figures in an attempt to inflate the importance or attractiveness of their products.  Truth is, current facts and figures aren't going to matter all that much.  I've mentioned before that design is super crucial, and I've also hinted at the notion that there are core attributes that make some products better than other.  There isn't really a blanket list of features regarding these attributes, so a little consulting with a knowledgeable agent is prudent.  To highlight my point, however, I'm going to dive into the topic of policy distributions.  This will become part of many posts discussing different features and why they matter.  Throughout all this, you'll begin to understand why it's difficult to recommend one carrier as better than all the others, as they can be varied in where they are strong (i.e. one size–or carrier–does not fit all).

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Why Stock Market Returns Matter, But Not for the Reasons You Probably Thought

Why Stock Market Returns Matter, But Not for the Reasons You Probably Thought

I've been known to quote stock market returns from a Compound Annual Growth Rate (geometric mean) point of view.  This calculation takes into account the effect time has on a rate of return and is wildly more useful than simply looking at average rate of return (usually quoted as the arithmetic mean).

But any good hardcore day trader or even the wannabe home gamers in the investment world should quickly ask a disarming question: “so what?”  So the markets have traditionally failed miserably to consistently post a year over year positive return over the course of the past decade.  There are still people who make money investing in equities, even your precious insurance companies.

And you know what?  They are correct. 

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