Great guest! A lot of useful information. I will have to listen to this a couple of times to get all that it offers. Rachel, I like your idea about thinking in terms of a system. I couldn’t agree with you more! Thank you for your time and effort in putting this together!
I’m so thankful for this video. This is how I’m building my business using this strategy. I do have a question how does the mutual company pay the dividends? In form of adding it to your cash value?
Brandon, Thank you for watching! You have multiple options regarding what you can do with the dividends. You also can change how dividends are paid over the life of a policy. We almost always start policies out with the dividend option of purchasing more Paid-Up Additions. Here is a video discussing dividends that you may find helpful: czcams.com/video/AwW0cKHR-sA/video.html
Thank you for watching! We don't believe in one-size-fits-all solutions. Annuities can be a great tool in someone's financial picture, but they are not the only solution, nor are they for everyone.
Thanks for watching! There are quite a few great Whole Life carriers. Here is a guide for evaluating life insurance companies: themoneyadvantage.com/best-life-insurance-companies-privatized-banking/
Paul I can tell you who the #1 mutual company is . Which is NYL (AAA rated by all 4 rating agencies ) I’d love to be a resource to you if this is an area you’re still navigating. I am based out of Los Angeles but can zoom with you any time . I wish you well.
Thank you for asking! The short answer is Yes. However it would require working in the US, or owning hard assets in the US such as a business or property. Additionally you would have to be willing to travel to the US for underwriting.
I read "Optimizing Retirement Income by Combining Actuarial Science and Investments" by Dr. Pfau... His case study of a 35-year-old couple is grossly inflated and makes his analysis very difficult to justify for the average couple at that age. It's easy to justify any financial plan when one massages numbers to make an optimal base case, but for the average American it is almost impossible to justify whole life insurance - ESPECIALLY with considering the need to budget for children.
"Steve" has $65,000 already in his 401(k), is capable of placing $15,000 aside strictly for retirement purposes. In 2023, if he was single with no children and only mortgage and education expenses this would be a bit of a stretch. But then he has a wife and children. "Susie" would also likely have a retirement plan, assuming she is working. The scenario says two children. The lower end of child care costs is $16k per child. There is also mortgage, car loans, extraneous recurring expenses, vacation savings, savings for events like repairs, weddings, etc. For this scenario to even be remotely realistic, the household gross income would need to be appx $200k (assuming taxes cut net to $100k for simplicity). This "average" scenario now applies to only 12% of the US population. It's out of touch at best.
I should note that gross income should probably be higher depending on Susie's ability to earmark money for retirement, if it's a two-income house. And if it is a two-income house, those kids are probably going to need child care, so earmark about $250/wk, approximate an additional $12k annual for that alone. This "average" scenario continues to stretch the more one considers reality and real financial burden.
@@jmnypop Your complaint is that his scenario does not apply to a larger percentage of the population based on your assumptions of how much their standard of living is? Regardless, assuming you are correct and it only applies to 12% of the population, this advice was never meant to apply to everyone. This information/strategy does not apply to everyone at a particular income level as each family's financial picture is unique, and the strategies and tactics for each family are unique. The purpose of this content is to inform not provide advice.
@@TheMoneyAdvantage As I said, it is easy to make conclusions that justify one's "ideal" position if the numbers are massaged to make an ideal initial condition. Anyone reading his white paper without actually identifying the massive liberties taken will come to very wrong conclusions. With these kinds of analyses, all it does is sound like Lucille Bluth, "It's just a banana, what could it cost? $10?" Someone also pointed out that the fees Pfau quoted in scenario 1 were grossly excessive. Using 1.59% for mutual fund fees is blatantly depressing the final result of that scenario, and it's not an insignificant amount. Another pointed out that Pfau seemed to acknowledge this in a Market Watch interview that investment into index funds, "the argument for the integrated strategy is less compelling". The more one looks at this white paper, the more it looks like a sales pitch for whole life insurance rather than an honest analysis. I will say, it did help inform me that my previous financial advisor, who ironically suggested reading Pfau's work, was directing me to move all my cash flow (including such things as investment account money for house renovations and vacations) into as many whole life insurance policies as could be bought. "Take a loan out against a policy if you really need the money!"... I could guess he was going for "scenario 4: all cash flow to whole life". Since then I keep a very tight eye on these kinds of analyses. They are often either only applicable to the very rich, or are trying to sell a product.
Thank you for watching! You can find it here: themoneyadvantage.com/dr-wade-pfau-maximizing-retirement-income-with-whole-life-insurance/. Go to the bottom of the article and you will see a place to enter your name and email for the white paper.
Thought I’d seen the name Wade Pfau before. I just remembered a columnist, I believe his name is Steve Bennett, who is a vocal critic of systematic investing the same sums over time. In other words, he’s against most automatic investing. He believes that valuations are supreme in investing, and he claimed that Dr. Pfau collaborated with him privately in his research, but the money management industry “reached out” to Dr. Pfau and he has since disassociated himself from Mr. Bennett. Something to keep in mind perhaps. The present financial paradigm is committed to preserving its preeminence
While we completely disagree with you on IUL's, this video was primarily about how an integrated strategy using whole life insurance and annuities with an investment portfolio provides more income during retirement. We have no desire the take on the risks of an IUL when we can get all the safety, liquidity, and control of a whole life insurance policy as our emergency /opportunity fund. All while using it to earn double-digit returns in investments we know and can control. With an IUL the insurance company only guarantees a gross earnings rate minimum and the death benefit for a period of time. With Whole Life, the cash value is guaranteed to increase every year by a minimum dollar amount, and the policy is guaranteed to endow. Even if you max fund an IUL, never miss a payment or pay late, and pay the extra fee for a rider to guarantee the death benefit to a specific age, you still don’t have a guaranteed cash value dollar amount. A whole life policy, whether it is max funded or minimally funded, still has a guaranteed cash value dollar amount (guaranteed to annually increase by a minimum dollar amount) and a guaranteed death benefit to endowment (typically age 100 or 121). Because a UL does not endow you can only reduce the death benefit to try to preserve the policy. Because Whole Life endows you can reduce the death benefit amount so it is GUARANTEED paid-up. Life insurance is not an investment. No matter how you design it, it is still life insurance. I want life insurance that I know will be there for me, not likely/maybe be there for me. Additionally, I want to know that my cash value (emergency/opportunity fund) will be there for me. In any asset, you can only maximize 1-2 out of the following 3 things: Safety, Liquidity, and Growth. You have to sacrifice at least 1. IUL’s sacrifice Safety to get Growth by transferring risk (themoneyadvantage.com/why-you-want-insurance-part-1-transfer-risk/) to the policyholder. When it comes to my emergency/opportunity fund, I will sacrifice growth for safety and liquidity any day. * IUL’s do not have guaranteed premium * IUL’s do not have guaranteed cash that increases every year all the way to endowment * IUL’s do not have guaranteed death benefit all the way to endowment * IUL’s do not endow. Endowment is when the cash value equals the death benefit and the company pays out the death benefit to the insured Whole life has these guarantees, which is exactly what I want in an emergency/opportunity fund. Here are a couple of resources that I would recommend to anyone considering purchasing an IUL: 1) czcams.com/video/wj3h7rSspdM/video.html 2) czcams.com/video/9z9uvl23YH4/video.html
Bobby, Those are illustrations, not "the truth." Illustrations are projections. What is true with an illustration is the first year values, everything after that is a projection. Additionally, the Guarantees are true, as long as you pay premiums as shown, which I find interesting because the video you linked to does not show the Guaranteed column for the IUL.
Bobby, I don't want to argue with you. If you believe that IUL's will provide you what you want then go for it, but you have to realize that they do not possess the same guarantees that contractually whole life has. This discussion is about actuarial science that has risk values that are very accurate. I find the IUL community always wants to say this mindset is wrong and yet all we are saying is the guarantees are not the same. If you don't care about that then go for it. Dr. Pfau is a well respected Princeton educated CFA who has dedicated his research to this topic and your response is, "Whole Life? Not even close." He challenges people to recreate his research. Can you supply research to validate your position? Good luck with your strategy. We are not trying to get you to change your mind. We are just speaking to people who want more guarantees.
Great guest! A lot of useful information. I will have to listen to this a couple of times to get all that it offers.
Rachel, I like your idea about thinking in terms of a system. I couldn’t agree with you more!
Thank you for your time and effort in putting this together!
Our pleasure! Thank you for watching and commenting.
I’m so thankful for this video. This is how I’m building my business using this strategy. I do have a question how does the mutual company pay the dividends? In form of adding it to your cash value?
Brandon, Thank you for watching!
You have multiple options regarding what you can do with the dividends. You also can change how dividends are paid over the life of a policy. We almost always start policies out with the dividend option of purchasing more Paid-Up Additions. Here is a video discussing dividends that you may find helpful: czcams.com/video/AwW0cKHR-sA/video.html
39:05 "how much income should annuities cover in retirement?" ALL OF IT. lol
Thank you for watching! We don't believe in one-size-fits-all solutions. Annuities can be a great tool in someone's financial picture, but they are not the only solution, nor are they for everyone.
What are the top 5 whole life companies for accumulation and favorable loans for retirement income?
Thanks for watching!
There are quite a few great Whole Life carriers. Here is a guide for evaluating life insurance companies: themoneyadvantage.com/best-life-insurance-companies-privatized-banking/
Paul I can tell you who the #1 mutual company is . Which is NYL (AAA rated by all 4 rating agencies ) I’d love to be a resource to you if this is an area you’re still navigating.
I am based out of Los Angeles but can zoom with you any time .
I wish you well.
MassMatual is another good one…
Is Whole insurance policy is available for those who live outside of the US ?
Thank you for asking! The short answer is Yes. However it would require working in the US, or owning hard assets in the US such as a business or property. Additionally you would have to be willing to travel to the US for underwriting.
I read "Optimizing Retirement Income by Combining Actuarial Science and Investments" by Dr. Pfau...
His case study of a 35-year-old couple is grossly inflated and makes his analysis very difficult to justify for the average couple at that age. It's easy to justify any financial plan when one massages numbers to make an optimal base case, but for the average American it is almost impossible to justify whole life insurance - ESPECIALLY with considering the need to budget for children.
What specifically did he “massage” and “inflate”?
"Steve" has $65,000 already in his 401(k), is capable of placing $15,000 aside strictly for retirement purposes.
In 2023, if he was single with no children and only mortgage and education expenses this would be a bit of a stretch. But then he has a wife and children. "Susie" would also likely have a retirement plan, assuming she is working. The scenario says two children. The lower end of child care costs is $16k per child. There is also mortgage, car loans, extraneous recurring expenses, vacation savings, savings for events like repairs, weddings, etc.
For this scenario to even be remotely realistic, the household gross income would need to be appx $200k (assuming taxes cut net to $100k for simplicity). This "average" scenario now applies to only 12% of the US population. It's out of touch at best.
I should note that gross income should probably be higher depending on Susie's ability to earmark money for retirement, if it's a two-income house. And if it is a two-income house, those kids are probably going to need child care, so earmark about $250/wk, approximate an additional $12k annual for that alone.
This "average" scenario continues to stretch the more one considers reality and real financial burden.
@@jmnypop Your complaint is that his scenario does not apply to a larger percentage of the population based on your assumptions of how much their standard of living is? Regardless, assuming you are correct and it only applies to 12% of the population, this advice was never meant to apply to everyone. This information/strategy does not apply to everyone at a particular income level as each family's financial picture is unique, and the strategies and tactics for each family are unique. The purpose of this content is to inform not provide advice.
@@TheMoneyAdvantage As I said, it is easy to make conclusions that justify one's "ideal" position if the numbers are massaged to make an ideal initial condition. Anyone reading his white paper without actually identifying the massive liberties taken will come to very wrong conclusions. With these kinds of analyses, all it does is sound like Lucille Bluth, "It's just a banana, what could it cost? $10?"
Someone also pointed out that the fees Pfau quoted in scenario 1 were grossly excessive. Using 1.59% for mutual fund fees is blatantly depressing the final result of that scenario, and it's not an insignificant amount. Another pointed out that Pfau seemed to acknowledge this in a Market Watch interview that investment into index funds, "the argument for the integrated strategy is less compelling". The more one looks at this white paper, the more it looks like a sales pitch for whole life insurance rather than an honest analysis.
I will say, it did help inform me that my previous financial advisor, who ironically suggested reading Pfau's work, was directing me to move all my cash flow (including such things as investment account money for house renovations and vacations) into as many whole life insurance policies as could be bought. "Take a loan out against a policy if you really need the money!"... I could guess he was going for "scenario 4: all cash flow to whole life". Since then I keep a very tight eye on these kinds of analyses. They are often either only applicable to the very rich, or are trying to sell a product.
Where can we read Dr. Wade's white paper?
Thank you for watching! You can find it here: themoneyadvantage.com/dr-wade-pfau-maximizing-retirement-income-with-whole-life-insurance/. Go to the bottom of the article and you will see a place to enter your name and email for the white paper.
@@TheMoneyAdvantage Thank you! :)
A key discussion on annunities begins at 39:00
Thank you for watching!
Thought I’d seen the name Wade Pfau before. I just remembered a columnist, I believe his name is Steve Bennett, who is a vocal critic of systematic investing the same sums over time. In other words, he’s against most automatic investing. He believes that valuations are supreme in investing, and he claimed that Dr. Pfau collaborated with him privately in his research, but the money management industry “reached out” to Dr. Pfau and he has since disassociated himself from Mr. Bennett. Something to keep in mind perhaps. The present financial paradigm is committed to preserving its preeminence
Thank you for watching!
Whole Life? Not even close. Properly structured IUL with the right carriers will give you the most income in retirement
While we completely disagree with you on IUL's, this video was primarily about how an integrated strategy using whole life insurance and annuities with an investment portfolio provides more income during retirement.
We have no desire the take on the risks of an IUL when we can get all the safety, liquidity, and control of a whole life insurance policy as our emergency /opportunity fund. All while using it to earn double-digit returns in investments we know and can control.
With an IUL the insurance company only guarantees a gross earnings rate minimum and the death benefit for a period of time.
With Whole Life, the cash value is guaranteed to increase every year by a minimum dollar amount, and the policy is guaranteed to endow.
Even if you max fund an IUL, never miss a payment or pay late, and pay the extra fee for a rider to guarantee the death benefit to a specific age, you still don’t have a guaranteed cash value dollar amount.
A whole life policy, whether it is max funded or minimally funded, still has a guaranteed cash value dollar amount (guaranteed to annually increase by a minimum dollar amount) and a guaranteed death benefit to endowment (typically age 100 or 121).
Because a UL does not endow you can only reduce the death benefit to try to preserve the policy. Because Whole Life endows you can reduce the death benefit amount so it is GUARANTEED paid-up.
Life insurance is not an investment.
No matter how you design it, it is still life insurance.
I want life insurance that I know will be there for me, not likely/maybe be there for me.
Additionally, I want to know that my cash value (emergency/opportunity fund) will be there for me.
In any asset, you can only maximize 1-2 out of the following 3 things: Safety, Liquidity, and Growth.
You have to sacrifice at least 1.
IUL’s sacrifice Safety to get Growth by transferring risk (themoneyadvantage.com/why-you-want-insurance-part-1-transfer-risk/) to the policyholder.
When it comes to my emergency/opportunity fund, I will sacrifice growth for safety and liquidity any day.
* IUL’s do not have guaranteed premium
* IUL’s do not have guaranteed cash that increases every year all the way to endowment
* IUL’s do not have guaranteed death benefit all the way to endowment
* IUL’s do not endow. Endowment is when the cash value equals the death benefit and the company pays out the death benefit to the insured
Whole life has these guarantees, which is exactly what I want in an emergency/opportunity fund.
Here are a couple of resources that I would recommend to anyone considering purchasing an IUL:
1) czcams.com/video/wj3h7rSspdM/video.html
2) czcams.com/video/9z9uvl23YH4/video.html
The Money Advantage
The truth
czcams.com/video/IUWtlOsdDBc/video.html
Bobby, Those are illustrations, not "the truth."
Illustrations are projections.
What is true with an illustration is the first year values, everything after that is a projection. Additionally, the Guarantees are true, as long as you pay premiums as shown, which I find interesting because the video you linked to does not show the Guaranteed column for the IUL.
Bobby, I don't want to argue with you. If you believe that IUL's will provide you what you want then go for it, but you have to realize that they do not possess the same guarantees that contractually whole life has. This discussion is about actuarial science that has risk values that are very accurate. I find the IUL community always wants to say this mindset is wrong and yet all we are saying is the guarantees are not the same. If you don't care about that then go for it. Dr. Pfau is a well respected Princeton educated CFA who has dedicated his research to this topic and your response is, "Whole Life? Not even close." He challenges people to recreate his research. Can you supply research to validate your position? Good luck with your strategy. We are not trying to get you to change your mind. We are just speaking to people who want more guarantees.
@@TheMoneyAdvantage wOw! Very well said 💣