Has Your 401K Become A 201K?

Has Your 401K Become A 201K?

On September 22nd, the Dow Jones Industrial Average fell another 390+ points.  Proposals by President Obama have fallen flat and nobody was impressed by the latest moves by the Federal Reserve.  The U.S, Congress has not come up with a plan of their own and it appears unlikely that any plan could be passed given the inability of Democrats and Republicans to compromise on anything these days.  There is no functional leadership in control of the Nation.

Our future looks even bleaker when you consider that most of the Republican candidates for President look like extremists that will be difficult for many Americans to support at the polls next year.  If the Republicans don’t beat Obama next year, we’ll be in worst position than when he took office in early 2009.  He’s already shown that he has no answers for the problems of the country and has even less ability to get his ideas passed.

As a result of all this, your retirement accounts have probably been dropping lately.  Interest rates are at record lows, so money placed in savings accounts and CD’s have never earned a lower rate of return.  Many accounts invested in stocks or bonds have been subjected to extreme volatility and may be on the way back to levels seen at the worst times of 2008.  Is there anything you can do to protect the money you’re going to need for your retirement?  Yes, depending on your age, there are two possible solutions.

If you’re within 10 years of retirement, a retirement annuity may be just what you need.  You’ll need to talk to a licensed life insurance agent to be sure, but a fixed or indexed annuity can offer the safety and security of bank accounts and CD’s while offering a much better rate of return.  Best of all, it’ll provide a guaranteed income for life when you retire, no matter how long you live.  Most retirement accounts can be invested in a retirement annuity, but please understand that they are not for everyone, so make sure you work with somebody you can trust.

If you have more time, or are actually just starting out, it might be better if your retirement account was an indexed universal life insurance policy.  This is probably the most misunderstood financial tool of all but, in recent years, these policies have outperformed many stocks-oriented funds and indexes while offering a guaranteed floor that protects you from loss due to market fluctuations.  For many people, this is the best of both worlds (safety with good returns), but it has a very big kicker – if set up properly, an indexed universal life insurance policy can fund your retirement with a TAX-FREE income for life!  Yes, it’s true that money invested in your “qualified” plan (IRA, 401k, etc) gets a tax deduction in the year it’s invested but, if you do the math, you find that the tax break you got while working is quickly offset and more by the tax-free income you can get from a life insurance policy.

If this is news to you, then you need to speak with your life insurance agent ASAP.  If you live in Southern California, give me a call (714-585-2371) or send me an email (EquityIndexLife@gmail.com) and we’ll have a private conversation with no obligation for you to buy anything.

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