“…The banking industry – one of the most powerful and influential industries in the United States – has a deep affection for cash value life insurance and treats it like a golden asset.” – Barry James Dyke, “Cash Value Life Insurance: Contempt Prior to Investigation”
It’s more than a bit ironic. We say “it’s like money in the bank” when speaking of a sure thing, something solid and secure. But if we’ve been paying attention to the bank failures in the U.S. over the last decade, we ought to realize that “money in the bank” is about as sure and secure as the famous “Unsinkable Ship” that hit an iceberg in 1912.
Of course, the FDIC has provided life rafts for bank failures so that savers have some protection against such failures, up to $250k. But are FDIC guarantees a solution, or simply a temporary fix that hides the risks our financial institutions take with our dollars?
Since the Financial Crisis, banks have put a lot of new cash in an old-fashioned product designed build greater protection, security, and profits they can depend on in unpredictable times. In this article (and part 2), we’ll examine what this asset is, how banks use it, how much they own, why they purchase it, and what can we learn from their example.
With the reinvention of work comes the re-enchantment of work, for good work makes for joy. – Matthew Fox
Retirement — or re-firement of the soul?
In spite of a general trend of a growing upper-middle class (detailed by Robert Samuelson in The Washington Post), the inconvenient truth is that many baby boomers are in pending financial crisis. Only 5% to 15% of this generation (born between 1945 and 1964) have saved enough to even have the option of retiring. And according to a 2015 GAO survey, an astounding 30% of these folks have no savings whatsoever.
Compounding the problem, of course, is increasing longevity. If you make it to 65, there’s a 25% chance you will live to 90. And as we’ve mentioned before, life insurers’ actuarial tables now include assumptions of life spans upwards of 120.
“We need a better plan B than just to rely on social security,” career reinvention coach John Tarnoff, author of Boomer Reinvention: How To Create Your Dream Career Over 50, said at a talk at Town Hall in Seattle recently. “We’re all going to have to keep working. The problem is: We’re not ready for this–and society is not ready for us to keep working either.”
It is not as if boomers are unaware. According to Tarnoff, many feel insecure or under-valued in their jobs, or ashamed that they have saved so little or were downsized for no valid reason. “They are unwilling to accept that their working lives are just being tossed aside,” he says. Boomers are understandably angry to find careers cut short while still at the top of their game.
So how do boomers actually reinvent their careers when they are shut out of a job market that considers them old, overpriced and out of touch?
“Change is hard at first, messy in the middle, and gorgeous at the end.” – Robin Sharma
Now that the worst of winter is past and spring is around the corner, people come out of hibernation and into action! As you’ll see, it’s the perfect time for Spring cleaning your home and your finances.
Here are five ways you can take advantage of this season to organize and streamline your finances and even put some extra spending cash into your pocket while you’re at it!
“Funding Nemo: A Pixar movie about Marlin trying to put his son through fish college.” – Twitter joke seen on Buzzfeed.com
No one told Heather Jarvis she couldn’t afford to go to Duke University, even though her modestly paid executive assistant mother and often-unemployed Shakespearean actor father couldn’t afford the tuition. She “charged it” to student loans and graduated several years later from Duke’s School of Law with honors… and a $125,000 bill. This is financial planning for college at its worst. (Learn how to finance your own education with our Ultimate Guide to Financial Planning Myths.)
Facing 30 years’ worth of $1,200/month payments and with a dream of becoming a lowly-paid public defender, Heather was in a quandary. Should she abandon her dream of standing up for those facing criminal prosecution, or just take the highest-paying job available?
Student Debt: “Say hello to adulthood, and goodbye to your paychecks.” – Anonymous
According to StudentLoanHero.com, Americans owe over $1.3 trillion in student loan debt, spread out among about 44 million borrowers. The average Class of 2016 graduate has $37,172 in student loan debt, up six percent from last year. The average monthly payment for a borrower aged 20-30 years is $351. And 11.2% of students have defaulted on their loans.
What can be done about the $1.3 trillion of student loan debt? How can you or your child escape decades of burdensome payments that drain your wealth? Or even better… how can you AVOID debt in the first place?
In this two-part article, we’ll share tips and strategies that may help you save thousands and get out of debt faster. Plus we have some important warnings of what NOT to do! And we’ll tell you where you can get help to qualify for loan forgiveness programs or refinance your debts into a lower-rate loan.
“People who complain about paying their income tax can be divided into two types: men and women.” — Anonymous
‘Tis the time of year when some Americans await refunds, while others groan, procrastinate, and start getting their receipts in order… tax time!
Unless you were one of the early birds who pounced eagerly on their W-2 or 1099’s, you may still have an opportunity to find deductions and maximize the tax savings on your 2016 earnings. We detail the deductions you won’t want to overlook, plus we name five “deductions” you CAN’T take after all!
“One of the funny things about the stock market is that every time one person buys, another sells, and both think they are astute.”
– William Feather
The stock market has been feeling VERY bullish lately, hitting 10 new highs in the last 10 days before a lull today. The bulls love Trump’s promises of decreased regulations and “big league” tax breaks for business.
We’re happy for all whose portfolio ticked up this month, and as the market breaks old records, it’s an excellent time to look at the big picture of your finances and consider some changes, especially if you’ve got money in the stock market.
A Different Financial Philosophy
First, let us admit that we’re a little biased. Partners for Prosperity advocates Prosperity Economics. It’s an alternative to financial planning that, unlike typical financial advice, doesn’t rely on stock market speculation to build wealth.
Prosperity Economics advocates that investors maintain a level of control over their finances, instead of delegating financial results to the markets, the government, or an employer who can legally move dollars from your paycheck and put them into mutual funds without so much as your signature.
(You know how some companies will send you junk mail unless you take the trouble to opt out in writing? Automatic enrollment for 401(k) plans works like that, thanks to some very effective lobbying of Congress by large financial corporations.)
It’s not that investing in the stock market will necessarily lead to a disaster. It could be very profitable! The point is, whether it climbs or falls, it’s out of your control. And since you can’t control the stock market, the more money you have in the market, the less control you have. Many are willing to give up some control for higher returns, but risk does not necessarily lead to better results, especially when a 50% loss must be followed by a 100% gain to recover the loss!
This website is provided for informational purposes only. The information contained herein should not be construed as the provision of personalized investment advice. Information contained herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security or investment. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future.
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