Confronted by Older Self, People Save More

jolieagedSince 2001, I’ve worked with young active-duty servicemembers in the military, trying to get them to save more for retirement. I can attest, the majority really don’t think much about retirement. How can we blame them; it seems so far off from now. In fact, according to research, two out of five don’t think about it at all.

Hal Hershfield, a professor UCLA’s Anderson School of Management is using age progression algorithms that basically mimics the processes of aging to see if Americans might save more if they literally faced the future. (See age progression of actress Angelina Jolie above.)

According to Hershfield, there is a real, positive impact in helping people to save more for their future. He stated, “In one of the studies we found people who were exposed to images of future selves allocated about twice as much money to a hypothetical saving account.” Hershfield said, “It allows people to say okay there is this future version of me and that person is going to benefit or suffer from the choices that I make today.”

Want to learn more, check out this link: http://www.cbsnews.com/news/back-to-the-future-technology-helps-adults-save-for-retirement/

WEALTH STRATEGY PARTNERS

WSP.LogoI’m excited to share that the Guardian® agency I previously represented (2009-2014) has successfully merged with Wealth Strategy Partners(WSP). I’m proud to be a part of this dynamic and innovative firm and feel it truly adds considerable value for our existing and potential clientsThe focus of WSP centers on our clients’ vision for their future to create a lasting impact on their wealth potential. Uniquely positioned to offer our clients access to one of the most comprehensive financial product platforms available today, WSP envisions and enhances our clients’ goals by designing a customized strategy and creating a life map to achieve and protect their wealth.

I will continue to strive to build personal connections with my clients, with the goal of strengthening existing relationships and introducing our wide angle, comprehensive financial planning process. This will enable my clients to begin building true net worth and memorable, lasting legacies. Part of that process includes The Living Balance Sheet which is a cutting edge financial planning software that will help us organize you financially and make sure all plans are working as efficient as possible.Here’s a 3-minute video: http://videos.thelivingbalancesheet.com/financial-truth

At WSP, we are committed to empowering our clients with an economic mindset that alters their existing beliefs about fear, doubt, and scarcity in the marketplace. Since most people are unaware of the avoidable dangers that threaten their wealth (i.e. – taxes, inflation, liability, probate, planned obsolescence, etc.), through WSP’s process, we are able to identify and help eliminate many of those dangers and generate the freedom and clarity needed to focus on building personal financial legacies and business ambitions. 

Let me share a new way of thinking. Our initial discussions with you are designed to determine if our financial philosophy is aligned to your personal & business objectives. Give me a call at (808)695-2131, or shoot me an email: garrett_wheeler@glic.com

Let’s get started!

 

 

Cool Washing Machine Aquarium

High-Risk Investments: Are You a Gambler? Like Rolling the Dice?

In Hawaii, many of our island residents consider Las Vegas their second home. It’s the “9th Island” in the Hawaiian chain. It’s a lot more accessible than Monte Carlo, and they even have ono grinds.

But here’s a message for all investors who like playing with high-risk investments: Math is not money, and money is not math. Imagine you are investing $1,000 in a mutual fund. You have a fantastic first year, earning a 100 percent rate of return, bringing your balance to $2,000. In year two, things go poorly and the investment loses 50 percent. Your balance is now back to $1,000. In year three, the market goes up and you earn 100 percent again, bumping your balance back up to $2,000. The fourth year markets tank again and you lose 50 percent. Your balance has now fallen back to $1,000.

Notice that your beginning and ending balances are exactly the same. Your actual yield is a big fat 0 percent. Here’s the interesting thing. What is your average rate of return? 25 percent. I know any investor would love to get a 25 percent return. A mutual fund with this exact performance could advertise, “Our fund has averaged 25 percent over the last four years.”

It’s a true statement. It is not illegal or blatantly dishonest. It simply fails to illustrate the fact that investors actually ending up with no return.

One of my close friends (and fellow Bruin) is now a major league hedge fund manager. He knows something about high-risk investments. But what does he have in his portfolio, aside from his astute equity choice of index funds? He has a guaranteed contract with Guardian Life Insurance Company of America. As a 150+ year old mutual company, Guardian pays him a respectable RoR on his participating policy. To be sure, Guardian distributes its profits to policyholders as dividends through the insurance policy. Whereas, on the flip-side, a non-participating policy is a policy that does not earn profits from the insurance company. While a dividend-paying whole life policy is not considered an investment, it certainly returns handsomely on an investor’s investment of capital into it.

In fact, to be clear, the primary purpose of life insurance is to provide a death benefit to help replace lost income and protect loved ones from the financial losses that could result from the insured’s death. However, a dividend-paying whole life policy does more. Aside from many other benefits, it offers a number of tax advantages, many of which are unique to life insurance. For brevity, here are just three huge tax benefits of life insurance:

1. You pay no current income tax on interest or other earnings credited to cash value. As the cash value accumulates, it is not subject to current taxation.

2. You pay no income tax if you borrow cash value from the policy through loans. As a general rule, loans are treated as debts, not taxable distributions. This can give you virtually unlimited access to cash value on a tax-advantaged basis.

3. Your beneficiaries pay no income tax on proceeds. Your beneficiaries generally receive death benefits completely free of income taxation.

In my decade-plus professional experience and humble opinion, people are simply unaware of the ways, or let’s just say, the right ways to utilize this most versatile of financial products. It is for this purpose that I strive to educate my clients. People need to realize that taxes will ultimately have the biggest impact on their retirement dollars down the road. Now is the time to address it.

For any conservative, long term investor, a properly structured dividend-paying whole life policy will outperform any tax-deferred option available. To boot, with our new technologies such as the Living Balance Sheet®, we can back it up anytime with real-time mathematical calculations. It’s empirical. However, like everything else, there are caveats. It all depends on one’s circumstances. And please, don’t take my word for it. Think for yourself and do the necessary analytical research. It must be based on your unique set of variables. If you do need any help, please contact my offices and let’s meet. There’s no cost and absolutely no obligation on your part. At minimum, I’ll help you run the numbers and you can decide for yourself. Here’s to your continued success!

Key 2014 Pension/Employee Benefit Numbers and Other Essential Tax Data

Our Business Resource Center (BRC) just sent me these important, Key 2014 Pension/Employee Benefit Numbers for a client-company of mine. I thought that these same numbers might be helpful to others as well. Many of the annual adjustments to the numbers on the attached charts are based on the federal cost-of-living index. Because the federal cost-of-living index for the quarter ended September 30, 2013, is higher than the cost-of-living index for the quarters ended September 30 for the preceding year, most of the limits for 2014 are higher than those for 2013. Unless otherwise indicated, all section references are to the Internal Revenue Code.