With higher taxes looming and stock markets more volatile than ever many individuals are looking for alternatives to their IRA or 401(k). However, few are having success finding a vehicle that gives them many of the same advantages without the risks.
Individual Retirement Accounts or IRAs have existed for quite some time and are being used by millions of Americans as a retirement planning tool. However, like the employer sponsored 401(K), the IRA comes with a laundry list of restrictions, rules, penalties and above all it comes with an incredible amount of risk.
It is strange that as Americans we are willing to put the majority of the money we save at such high risk. Late 2008 taught us all a lesson that should not be forgotten so easily. As many men and women looked forward to retirement in 2009 they were baffled as they watched their retirement accounts drop to less than half of their value. It was this painful event that forced many younger workers to seek out alternative solutions.
The problem is that the gurus of the financial industry will call you crazy if you don’t follow their ‘plan.’ A plan that consists of maxing out your employer 401(k), maxing out an IRA for yourself and then maxing out an IRA for your spouse. Let’s look at this plan logically. What you have essentially done with every dollar that goes into the plans mentioned is lost control of it. You have given up control of that money. From now on the government will tell you when and how you access that money, they will tell you how much you can contribute and they will penalize you if you don’t follow their rules. Not to mention your money is not invested into an incredibly volatile market that can change on a whim.
So what do we do? What are the alternative that are out there? Some have decided to take their money and purchase gold, silver and other precious metals. Others have invested solely in real estate. These are both great hedges against inflation. Some have simply put their money under their mattress or in a savings account with the understanding that they’ll probably do just as good as the guy who rides the market roller coaster.
There is another group that has realized the power of dividend paying life insurance and have implemented a concept called Infinite Banking. Some life insurance companies have returned between 3-6 percent consistently for over 100 years, but thats not the best part. Money inside a properly designed life insurance policy will grow tax free forever and will be 100 accessible by the policy owner. Not only that but you will never have to worry about your money decreasing in value as there are guarantees in place to protect your capital.
The traditional financial methods available to us are simply not performing they way they used to and we have to shift our approach or we’ll find ourselves on the brink of retirement with hardly enough money to last a few years.