Category Archives: Reduce Taxes

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New QLAC Ruling Can Reduce Your Taxes in Retirement

QLAC, Longevity Annuity, Qualified Longevity Annuity Contract

This is how Investopedia.com defines a longevity annuity:

“As more people retire earlier and live longer, there is a growing concern about having sufficient income to span what may be a retirement period lasting 30 years or more. Longevity annuities guarantee that you do not outlive your retirement benefits. The insurance company agrees, in return for the premium you invest, to pay a periodic income amount for the rest of your life, starting from a designated post-retirement age.”

A great benefit of owning a longevity annuity is that the cost you pay upfront is much lower than other annuities whose payments begin right away. They also provide people with the reassurance that they will have income as they get older, which is a huge plus since today’s average life expectancy has increased…

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New Study Reveals Insight Into Americans’ View on Retirement

Franklin Templeton Investments conducted a new 2015 survey called the “Retirement Income Strategies and Expectations (RISE) Survey,” and I recently read an interesting article on Yahoofinance.com that discusses the survey’s findings.¹

This survey included 2,002 Americans, and Franklin Templeton Investments says their “annual survey reveals significant insights about the views, expectations and income strategies people have regarding retirement.”²  The company also said this survey has taught them “more about individual behaviors and the impact working with an advisor has on helping people prepare for what’s next.”²

I found this survey very interesting, so I wanted to share my opinion on some of its findings.

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One of The Last Remaining Legal Tax Shelters

One of the few remaining legal and legitimate tax shelters left is Cash Value Life Insurance. There is a minimum one can pay for a given amount of insurance coverage for a specific age. Who determines that? The insurance company, naturally.

They will tell you how much you must pay for indemnity on which they bear risk. Insurance companies and their actuaries calculate the least amount of premium they can charge and still make a profit.

But is there a maximum you can put into a cash value life insurance policy?

Yes. The government will tell you the maximum you can put into it. Why? Because of the tax advantages life insurance provides. Essentially, the government has decided the upper limit of tax-advantaged growth they will allow you to have.

That tells me that it must be a good thing, if the government regulates it. If you buy more life insurance than the limit set by the government, it becomes what is called a Modified Endowment Contract (MEC) and is no longer tax advantaged.

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2 Concepts That Give us a New Way to Look at how Money Works

Albert Einstein was right to call compound interest the eighth wonder of the world. Like the atom, it can accomplish powerful things. Two things are true about compound interest: It works best:

  1. Over time, and
  2. If you leave it alone.

The concept of the interest earning interest on interest earning interest is the simple reason why the rich get richer. It’s an immutable law of finance.

If you stop and think about it, whether we know it or not, we finance everything we buy. “But wait a minute,” you say, “I pay cash for everything I own.” Really? The cash you pay could be earning interest if you had kept it, couldn’t it?

So, by forfeiting that potential interest, you essentially financed it, right? If you paid cash, you have to make payments to yourself to get back to where you were before you made the purchase.

Acting as Your own Bank

The Infinite Banking Concept ® is a concept that is rapidly growing in popularity among those whose goal is to create wealth for themselves, rather than create more wealth for the lending institutions. The concept was developed by Nelson Nash, who is also the author of Becoming Your Own Banker.

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What is a Guaranteed Lifetime Investment (GLI)?

I’ve had clients tell me the Guaranteed Lifetime Investment (GLI) was the “answer to all of their retirement concerns.” That’s a pretty big statement, which is why I want to tell you a little more about it…

The reason people love using the GLI as part of their overall retirement plan is because they get the benefits of the stock market without all of the “baggage” that comes with investing directly into the stock market. What I mean by that is, the GLI allows you to participate in market gains without the threat of market losses.

Let me explain…

People like the concept of the stock market because of the earning potential. But, as you know, that earning potential comes with a huge losing potential, as well. In retirement, that’s not exactly something you should be gambling with. However, just because it isn’t smart to solely invest in the stock market in retirement, doesn’t mean you shouldn’t have the opportunity to participate in the market. That’s where the Guaranteed Lifetime Investment comes into play in your retirement plan….

The Guaranteed Lifetime Investment can get you substantial returns with NO downside risk.

How Does The Guaranteed Lifetime Investment Work?

 The GLI is linked to a specific index investment, and your returns are linked to the performance of that index. What you must understand here is that your money is NOT invested in the stock market. It is linked to the stock market through these indices. It is not invested in those indices or the individual stocks that they track.

For example, let’s say your GLI is linked to the Dow Jones Industrial Average. If the value of the index to which your GLI is linked goes up by 6%, then so does your account balance. If the index goes up by 8% the following year, then your account would go up by 8% as well. You get the idea.

Now, what about when the market goes down (as we have learned can happen overnight)?

What happens if one year the Dow Jones drops by 5, 20, or even 40%? That’s where the “guaranteed” part comes into play. With a Guaranteed Lifetime Investment, you are GUARANTEED to never lose. Ever. You won’t gain anything, but you won’t lose anything either. No stock you buy will ever come with the word “guaranteed” attached to it. That is why no person entering retirement should 100% rely on stocks to provide them stable income.

To put it simply, unlike traditional investments, your GLI account sits on the sidelines and waits for the market to rebound. Your account then grows by tracking the upside of the market, but never the downside, and your gains are locked in at the end of each year. Think of a car that is designed to avoid potholes in the road 100% of the time, guaranteed. Every time the car is in motion and it sees a pothole, it simply avoids it and the ride continues to be smooth and effortless. That’s sort of what it’s like to have a GLI in retirement—a smooth, safe ride.

This product was designed to give people the best of both worlds in retirement: stock market participation without the risk, and guaranteed income that has the potential to increase. The guarantees don’t stop there, though.

With some of these GLI products, you are guaranteed a minimum return on your account, regardless of market performance. Yes, that means that, even during a down year, your account still wins. It might not be a huge win, but a small win is better than a huge loss, right? A huge loss is what you can (and will) eventually face if you go the traditional route in the stock market.

Is There A “Catch” To The Guaranteed Lifetime Investment?

That depends what you define as “a catch.” There aren’t any hidden fees (like there can be with variable annuities), or some huge red flag that you should know about. The only “catch” here is that Guaranteed Lifetime Investments generally have a cap on the upside. That means that you can only earn so much with market upside.

In other words, if you want a contract that gives you that no-loss guarantee I was just telling you about, you may have to agree to a cap on earnings. The amount can vary from contract to contract, but let’s pretend that your contract has an 8% cap on earnings. If the market shoots up 25% one year, your account would rise in value by 8%, not 25%. Your account wouldn’t participate in all of the gains that year.

Is the tradeoff worth it? Does it pay to limit losses if that means you have to give up the full benefits of a raging bull market? The numbers say YES! 100%. It’s a good product for most people, and one of the BEST products for retirees. The proof is in the numbers, though, right?

To give you a general idea… From 1995-1999, we saw one of the greatest bull markets of all time. The stock market was the place to be. Now, fast forward just a bit to the two ferocious bear markets that kicked that bull so far down, it became just a little spec on Wall Street. Let’s say you invested directly in the S&P 500 at the end of 1991. In 1995, you would have had a 34.11% return. In 2008, you would have lost 39.23%. You tell me… Does that sound good to you?

Is a Guaranteed Life Investment Different From a Fixed Indexed Annuity?

I once did an experiment and described the Guaranteed Life Investment to a room full of people attending an investment workshop. I told them exactly how it works, much like I’ve done for you in this report. I then asked the question, “How many of you would like to be in that type of investment?” All I could see at that point was a sea of hands shoot up in the air. Every single one of them. The entire room said they found it to be an appealing investment.

I followed up that question by asking, “How many people here like annuities?” Only three hands went up. I then revealed to the room that the investment I had just described, and the one they had unanimously endorsed, was, in fact, a fixed indexed annuity. Crazy, right?

Have you ever heard the saying, “don’t knock it until you try it?” Well, you might be shocked at just how beneficial a fixed indexed annuity could be in your overall retirement plan. I’ve seen people shocked by this before. And, of course, it is very possible that a fixed indexed annuity would not benefit you in ways it benefits others. The only way to find out, though, is to do an analysis.

Set up your free strategy session right here on this page (scroll up—you’ll see a yellow “retirement strategy session” button on the right side of the page), or you can give us a call at 1-352-561-4571! Together, we’ll determine if your overall retirement plan can benefit from the fixed indexed annuity.

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How Do I Reduce, Lower or Minimize Taxes On Social Security?

In 1935, when President Franklin D. Roosevelt signed the Social Security Act into law, it is claimed that he vowed never to tax Social Security Benefits. FDR kept his promise, too, because as long as he was alive, there was no tax imposed on Social Security benefits. But during Ronald Reagan’s presidency, the Social Security Amendments of 1983 changed all of that. Beginning in 1984, if your base income as a single taxpayer was $25,000, or, if you earned more than $32,000 per year as a married couple filing jointly, then up to 50% of your Social Security could be taxed by the Internal Revenue System.

The next tax increase would come with the 1993 budget deal under President Bill Clinton, which raised taxation to up to 85% of benefits for single filers with incomes of more than $34,000, and for couples with annual incomes of $44,000 or more.

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How Can I Maximize My Social Security Benefits?

When I was in junior high school, I decided I would learn to play chess. It was sort of a fad sweeping the eighth grade. I thought the best way to learn the game was to play with another classmate who already knew the game. I figured chess couldn’t be much more complicated than checkers. After all, they were played on the same board. I knew the basic pieces and how they moved. It looked like fun. The other kid slaughtered me. It was checkmate in fewer than 10 moves every time we played – that is, until I bought a little 50-cent book entitled Chess for Beginners at the local news stand and learned that there was something called “strategy” that was involved in this game. Once I understood the rules and strategy, I rocked! Well, that may be overstating it a bit. At least I didn’t get killed so much.

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Can I Work And Still Collect Social Security?

You’ve been paying tax into the Social Security system for many years now. Every time you receive your paycheck, you look at the stub and your eyes scan to the place where the deductions are spelled out. You grimace. It pains you to think of all of the money you have earned that never reached your bank account or your pockets.

Rest assured you are not alone. American workers across the country go through the same emotions every payday.

On January 1, 2013, a lame duck Congress at the last minute voted to approve legislation that would avoid what the media dubbed the “fiscal cliff,” a catchy term for the conundrum that the U.S. government would face at the end of 2012, when the terms of the Budget Control Act of 2011 were scheduled to go into effect.

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What Do I Need To Know About Social Security Before Making An Informed Decision?

To copy a page from the inimitable Jeff Foxworthy, who made his mark on American audiences with “You may be a redneck if…” jokes, you may be a baby boomer if:

  • You know what a “sock hop” is.
  • You ever listened to “The Lone Ranger” on the radio.
  • You know who Howdy Doody was.
  • You ever used Brylcreem.
  • You can complete this song lyric: “I wonder, wonder, wonder, wonder who…”
  • The first photos of you are in black and white.
  • You ever used a metal ice tray with a lever.
  • Your family had one automobile and it had fins.
  • You know what a pet rock is.
  • Sean Connery will always be James Bond to you.
  • Your first allowance was payable to you in change.

Officially, baby boomers are those who were born between the years 1946 and 1964 when the birth rate in America rose dramatically following World War II. Those post-war babies have shaped the country and the world socially, philosophically and economically, and they are still doing it. The earliest of the boom generation are turning 65 at a rate of 10,000 per day. Words they applied to “old people” in the heyday of their own youth, such as “retirement” and “Social Security,” are now being used in connection with them.

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How Do I Act As My Own Bank? … The 770 Plan!

Albert Einstein was right to call compound interest the eighth wonder of the world. Like the atom, it can accomplish powerful things. Two things are true about compound interest: It works best (a) over time, and (b) if you leave it alone. The concept of the interest earning interest on interest earning interest is the simple reason why the rich get richer. It’s an immutable law of finance.

If you stop and think about it, whether we know it or not, we finance everything we buy. “But wait a minute,” you say. “I pay cash for everything I own.” Really? The cash you pay could be earning interest if you had kept it, couldn’t it? So by forfeiting that potential interest, you essentially financed it, right? If you paid cash, you have to make payments to yourself to get back to where you were before you made the purchase.