7 Insights About Self Employed Retirement
So last night my financial planner and I chatted from 9pm to about midnight and thought you might be interested in some of his insights about self employed retirement. This information actually applies to all types of retirement but I’ll share how this woke me up on how many people need to have a plan.
Why Bother Thinking About Retirement?
Because the older you get, the harder it is to setup a nice plan. The younger you are, the easier it is to be set for your retirement. Why am I talking about self employed retirement on my MLM blog? Because more people need to understand how important it is and to avoid some of the common problems with it.
Insights about investing from My life as an entrepreneur
When I was a real estate investor in Florida from 2004-2008, I did a LOT of risky investing. Invested in real estate LLC’s that ended up being scams, lent private money and just didn’t manage my money well at all. Since bouncing back and more than doubling my income since real estate days with my network marketing business I have been scared to invest in anything (other than gold and silver) but have left large amounts of cash in the bank as I felt more “safe”. Until last night I thought that IF I put money into a retirement account I would not be able to touch it until I hit 59 and a half years old but it turns out there are other options.
7 Insights About Self Employed Retirement
**Warning: As of this writing I am not a financial planner or licensed insurance guy, just sharing what I learned from my planner.
1. Keeping more than a few months worth of income in a bank account is stupid. It’s only slightly smarter than keeping cash under your mattress. You only earn 0-1% and it simply is not safe. It shows up in asset searches if you are about to be sued, and creditors and the IRS can get it if they want. (don’t worry, there are options)
2. The banks are making lots of money off of you, its better to be your own bank. The banks take your money, pay you 0-1%, then they invest in insurance policies and make 5-10%, then they lend it back to you via credit cards and loans and I don’t recall the last loan or credit card I got that only charged me 0-1% =)
3. Traditional IRA’s and 401k’s suck. So, traditional IRA’s and 401k’s allow you to write off your contributions as you put them in, so that is good right? Well, not when you realize that they tax you when you pull out that money. When you are older it’s at least possible that you may have less income coming in, and taxes will be higher. What you “saved” in 40 years of contributing could be paid back in 3-5 years because you are being taxed on the COMPOUND (assuming it actually grew).
4. 98% of people have to take money out of their 401k or IRA before they reach 59 1/2 thereby being hit with a penalty. Isn’t it interesting that where banks put their money (insurance policies) there is no penalty for early withdrawal? You can pull out 90% without a penalty whenever you want.
5. Most people underestimate how much money they need for retirement. Pay attention to this my friend, no matter where you are in your network marketing business. Check this out…lets say you are going to live to 100 and you want to retire at 70. What would be a daily dollar amount you might spend on food alone? Let’s say you budget to spend $40 a day on food alone, certainly not eating steak and lobster but also not eating tuna salad. $40 a day, times 365, times 30 years is $438,000. This does NOT include rent or mortgage, fun, movies, cable TV, gasoline, or clothes. Anyone have an aha moment?
6. If you have an IRA, 401k, or a pension plan, and you die, the IRS taxes the estate and then taxes what money is left over that goes to your heirs. When you have your money in the right insurance plans, you don’t get taxed on the growth or when you withdraw and your heirs actually get more money than you put in via the life insurance itself.
7. Do you have a traditional plan that lost money in 2001 or 2008? Chances are IF you have a plan, you did. With the right insurance programs you have no risk of losing principle regardless of how volatile the market is.
I know this post is VERY different than my normal stuff but I believe that MOST people are not prepared for retirement and have no idea what their options are, do you like me talking about this sort of thing? Was this post helpful? Please comment below, if this is not beneficial to you, don’t worry, I’ll get back to the regularly scheduled program of teaching you how to grow your network marketing business tomorrow but again would love to hear your feedback if this helped you. By the way, I have already been getting asked on my facebook page to share with you who I use for a financial planner. He is licensed in Florida so if you are in Florida, leave me a comment and I will have him reach out to you (if you think that would be beneficial).
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