CASH VALUE LIFE INSURANCE IS MY RETIREMENT
I was so excited when Kelly and I started our Roth IRAs, and even her 401k at work. It was like we were finally growing up. We were building a future. I could sleep better at night knowing I was investing in our retirement... until I realized it wasn't growing very much. Our $10,000 had made just short of $500, in 3 years! That's not a growth I'm interested in living on.
That's less than 5% - if you know how to figure it correctly. I'm sure I don't. But I do know that most financial advisers talk about getting a 10% return. Try less than half that. I was discouraged.
Did you know that we can withdraw our money from a Roth IRA, just not the gains? Wow! I wasn't leaving much in those 2 accounts. To this day, almost 3 years after we withdrew it, it's barely over $500. Combined!
Now, I'm sure many people make money in the market. The key is to buy low, sell high, right? What happens if when I'm ready to retire, I'm having to sell low? My father-in-law lost a boat-load not long before he hung it up for traveling. I'm sure he recovered some, but I'm not working my butt off, investing in the market, only to have it tank when I'm ready to retire.
What if 2009 was the year we were due to retire? How would that bank account have looked? There's a pretty good chance those 2009 retirees chose not to retire. Maybe they didn't have a 'choice'. They may still be working.
In 2011 I started studying life insurance policies as investment vehicles. It sounded great at first. Then I become skeptical.
"If they're so good, why isn't everyone doing this?"
No one had a legit answer for that question. I've since learned that people like to do what other people do. It's makes us feel comfortable knowing that we're with the majority. If the majority fail, at least I won't be alone.
Let's talk about the majority. No, let's talk about the minority:
1 out of every 200 high school baseball players (seniors) will be drafted to the minor leagues. That's half of a percent. Hang with me, I'm going somewhere with this.
10% of minor league baseball players actually make it to the major league. That's my boy up to bat, RyRo Gann.
That means 1 out of 20,000 high school baseball players will play for a major league team. ONE OUT OF TWENTY THOUSAND!
The average salary of a major league player is $3.4 million.
Most people don't play major league baseball. Why not?!!! There is so much money to be made there!
It's because we have other options. We have easier paths to take. Playing major league baseball takes an Outlier (excellent book, by the way).
Using a life insurance policy to build a retirement fund is not for everyone. Just like baseball. It takes discipline.
My current policy has a death benefit of $446,000. My cash value is $24,000. Folks, I've had this policy for 25 months. I put $10,000 in it every April, for a total of $30,000 thus far. And my cash value is $24,000!
You say I'm $6,000 short, right? Did you forget about the $446,000 death benefit?
I could take a loan right now, let's say $24k, die tomorrow, and Kelly would still get $422,000. And what did it cost? $6,000.
But I didn't get it for the death benefit, or not solely for the death benefit. I take loans from it. I always pay them back. I'm my own bank. I love it!
I most recently used it to pay down one of my mortgages. I wanted to get rid of PMI, so I paid the home loan down to 80% and now my mortgage payment is $100 less each month. Now, every month I pay $100 back to my life policy to repay the loan.
It may seem weird but every penny I pay to my life policy is a penny I'm paying to myself. There is no set payment plan for my loan. I don't have to pay it back. Yes, it takes power away from my policy growth, but it ain't going to collections. No bill collector is calling my house!
That's why this type of retirement isn't for everyone. Some people need the government telling them when they can get their money, and how much of a fee they pay in order to get it.
Not me. Kelly and I realized the freedom that came with this type of investing, and we disciplined ourselves to make it work. And boy does it work. We put $20,000 in our policies every April. We taught ourselves to save the $20,000. We found it in places most people never look: how much we were paying in a separate term life policy, one for each of us as a matter of fact. We found it in the Roth IRA investment, the 401k investment.
Speaking of 401k; don't be fooled to invest in your work's 401k simply because they match a certain amount. Kelly had to invest 8% just to get her employer to invest 3%. What! 8% is high for a 401k investment. Give me a break!
We bailed on the market, and I couldn't be happier. Sure, it took me 11 months before I was confident with investing in a life insurance policy. But I'm sold, and I've used it, paid it back, and done it again. It works like a champ.
Not only am I building a retirement that doesn't have me handcuffed, but my boys will have a death benefit when I move on to a better place.
I'm sold on being my own banker. And I'm sold on the company I use. I'm sold on a cash value life insurance policy, if it's used the right way.
You must be careful who you talk with and how this policy is built. My $10,000 policy paid $2,700 in commission and was built to benefit the policy owner, not the agent receiving commission. Some agents will build a $10,000 policy that pays $8,500 in commission, and it's not built to benefit the policy owner. It's built to pay the most commission to the agent.
Download the resources I used while studying to be my own banker. I'll save you 11 months worth of wondering.