Preview:

Many of the FedEx and UPS pilots still have a pension and they often ask what to do about the survivor benefits. Many of them are inclined to lean towards the 50% survivor benefit, but that’s not typically the best option.

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More About This Episode:

To help us explore some of these other options, we’ve invited Dave Befort onto the podcast today. He’s an expert in the Infinite Banking Concept for pilots as well as many other aspects of retirement, and we’re going to talk today about different survivor benefit options and how they play into your overall retirement strategy. Dave believes strongly in using life insurance to help you control your money and he’ll explain some of these strategies in this video.

 

Sky Snippets:

0:00 – Intro
2:06 – The math behind the 50% survivor benefit
6:02 – The questions you need to be asking
12:02 – Another option: permanent life insurance
19:35 – The benefits of the Infinite Banking Concept
22:49 – Tax strategies
29:24 – Sequence of return risk

Learn more about Dave: https://maxperformancefinancial.com/about/

 

Audio Version:

 

Resources:

Retire Pilots – https://retirepilots.com

Get your FREE Retirement Toolkit – https://bit.ly/3ZmZsaX

Pilot Tax – https://pilot-tax.com/

The Pilot’s Advisor Podcast is also on video. Watch & Subscribe on YouTube: https://bit.ly/3EIEBW2

 

Episode Transcription:

(Note, this is an automated transcription. Please forgive any errors.)

Ryan Fleming 01:11
Welcome to another edition of the pilots advisor, we have Dave Baffert, our expert here with the IBC for pilots, and also many other aspects of retirement. Dave, thanks for coming on again today.

Dave Befort 01:23
Yeah, good to be with you again, Ryan. Let’s do it. And today,

Ryan Fleming 01:27
we want to talk about some Survivor Benefit Options and how that’s going to play into this whole strategy and how maybe you could come up with a better way of doing things. Dave? was a lot of FedEx guys and ups guys that still have a pension. They they come up with the question of, hey, what am I going to do about that pension and the survivor benefit, and I think a lot of them are geared towards doing this 50% survivor benefit, which, which is not what I would recommend. And so I’d like to present to you what that looks like and get your opinions on, on maybe if there’s a better way to set that up. Okay, absolutely. So the numbers the way it works, and I’m going to use FedEx as an example today, because this is going to apply to a lot of our clients when they come up for retirement. And right now the pensions at $130,000 a year, which, you know, could change if we ever get a contract. But if they pay by into the 50% survivor benefit, they ended up losing about $20,000 out of that pension every single year for that 50% survivor benefit. So if I take $130,000, and I divide that in half for that 50% benefit, that’s about $65,000, assuming they earned the full pension. And then after tax is, I mean, we’re well into probably high 40s, maybe low 50s is what the spouse is is actually the benefit that they’re accruing. But I know we’ve had some conversations about, hey, is there a better way to do this? What risks are we taken on by doing the 50% survivor benefit, let alone losing that 20 plus $1,000 out of your pension every single year. And that cost? I’m sure it will go up over time with inflation. So but yeah, thanks for being on the show. And I’m glad we can discuss these issues. Yeah, this

Dave Befort 03:15
is a great conversation. And it’s very, any military guys listening, who are still flying for the guard of the reserves. This will apply to them, even if they’re not with FedEx, because as you know, the military has that survivor benefit plan as well. And they, they do something similar, they take something like six and a half percent of your paycheck of your pension every year. And and they end up paying up to 50% or 55% total of your base pay. Right. So the way I looked at that was essentially take 20% of what you make right now as an active duty officer, or military member. And that’s what your surviving spouse would be getting. It’s not a whole lot. But you know, let’s focus on the FedEx guys and that and gals and that Survivor Benefit Plan. I’ve talked to several of your clients over the last month, and some of them are approaching retirement, some of them have 20 years left. So they’ve got some some guys have time to figure this out. Some guys are right on the precipice of having to make that decision. This is this should be automatic Survivor Benefit Plan and automatic, you’re crazy. If you don’t do it, go for it. Okay, and it may be the right fit for some people. But let’s explore some other options first. And let me give you some questions to ask.

Ryan Fleming 04:35
Well, absolutely. And, you know, I’m all about planning for retirement, what that means that starts in your 30s and 40s. That doesn’t start at Hey, I’m 62 and I’m about to retire. And I think we can both agree that there’s much better ways of planning for this, this Survivor Benefit and using other tools, and I know that it’s a lot more expensive or not as efficient if we’re trying to figure it out for an individual It’s 58 to 65. Versus if we actually start building something when they’re in their 30s, or 40s. And I, what I’m trying to do is I’m trying to educate more and more people so that we can start building these things earlier.

Dave Befort 05:14
Yeah, absolutely. The sooner the better. I mean, when’s the best time to plant a tree 20 years ago, when’s the second best time today. So, you know, the, it’s never too late to start thinking about this, but it’s never too early, either. And especially, you know, your, your, with a FedEx or any other major airline, you’re gonna be, you’re gonna be making pretty good money over the course of your career, you know, that, that amounts just going to be going up. Don’t, don’t leave it all to pay what the company is doing with you, or for you with the pension and the 401k, which all that stuff is, is amazing that they do that for you without you having to put anything out of pocket. But start taking some, you know, some other steps and personal responsibility and, and planning ahead for those things. So one of the questions I I would ask is, hey, when you when you die, you know, there’s gonna be a morbid conversation. So when you die, because it’s guaranteed to happen? How much of your income is your family want replaced? Do they just want half of it? Or would they prefer to have all of it replaced? Here’s some of the risks that maybe I don’t know how well FedEx educates their people. I know how well the military educates the retirees on this stuff, which is very little, they say you should do this.

Ryan Fleming 06:35
Well, and I would always say it’s about about the same. I mean, unfortunately, as pensions have gone away in our society, it’s just thrown upon the individual. And I hate and we don’t teach in schools, we don’t, we don’t have any education out there. And FedEx is very similar to the military, there’s very little to no education on it, or we don’t know where to go to get it. There’s some some retiree meetings that they have. And I always recommend people to go those not when they’re about to retire, go do it in your 30s and 40s. And then you could start making decisions throughout your career that are going to get you in a better place for retirement. But yeah, I definitely want to hear how you know, not only the questions that you’re talking about, but but even for the Marines that are listening, presenting a case of how we might be able to do this in a more intelligent fashion, I would

Dave Befort 07:23
say, you know, you don’t need to wait until you’re 65 to start a survivor benefit plan. You start that when you’re 3035 45. Like you can start that today, talk, ask a few questions to make sure people are thinking this through before they make that final decision. And they’re thinking of everything about it. Right, all the risks involved. So what happens? You do the Survivor Benefit Plan? And God forbid your spouse predeceases you? Do you get any of that money back that you put in?

Ryan Fleming 07:53
Or would you be losing that $20,000 out of your pension? Your life?

Dave Befort 07:58
Right, right. I mean, if your spouse dies, then the Survivor Benefit Plan is, so you don’t have to pay into it anymore. But you don’t get that money back either. Is my understanding, right? All those years you paid into it, but you better make sure you die first. That’s all I’m saying. And then you better make sure that your spouse is going to outlive you by you know, a certain number of years to make up for everything you paid into that during your retirement. So I mean, you can do the math pretty easy. You put in 20 grand a year, you know, every three years you pay in is about one year of benefits for your spouse, right. So, you know, a few things have to happen to make sure you come out on top and your spouse comes out on top. One is you need to die first. You know, there’s other complications and retirement. I mean, people get divorced. It happens. I don’t know. Hold on, hold on.

Ryan Fleming 08:55
I’ve never met a pilot that’s been divorced.

Dave Befort 08:58
Yeah, well, most of them are remarried by time they’re retired. But you know, the divorce rate for second marriages is even higher than than first marriages.

Ryan Fleming 09:07
And there’s a big transit transition there too, because most of these pilots have been out flying in gone for two weeks out of every month.

Dave Befort 09:15
Oh, yeah. Every day? Yeah, it’s a

Ryan Fleming 09:18
big transition. So and I always joke about that, too, that, you know, she or he doesn’t like you that much. And you need to ease into this whole retirement thing and slowly work less. And that’s it for everybody’s case. But sorry, I digress. I interrupted.

Dave Befort 09:34
And I don’t know the specifics, you know, in a divorce with FedEx, that the Survivor Benefit Plan does. Do you have to keep paying into that. Does that person get to? I don’t know. But you know, make sure you do know those specifics before you make that final decision. Not that anybody ever plans on getting divorced, but hey, it happens. You know, what about so if you get now your spouse gets 65 grand a year where Here’s the rest of the income coming from. If he or she wants to maintain that standard of living, they’re going to have to pull more from the 401k. Right to supplement that, which means potentially a 401 K isn’t going to last as long. Right? Or maybe, maybe they just have to go with a lower standard of living at that point. So where’s the other income coming in to replace what you built up? Right now? You know,

Ryan Fleming 10:25
and sadly, every time I ask these questions, or I do the analysis, people are under protected to where they might be living a lifestyle day to day right now of making $300,000 a year. And their their family, the spouse would have to live off of like, almost maybe, in most cases, it’s crazy. It’s like 70 grand a year, overnight, your life has drastically changed. And oh, by the way, if you’re not in retirement, yet, you’re going back to work.

Dave Befort 10:55
Yeah, how many times if you’ve been to target or, you know, Home Depot, and you see the silver haired, old guy, super friendly guy working at the counter or, or greeting you? And you’re like, What a nice guy, but man, something didn’t go right. In his financial planning. Right to get him to this point, you know, you’re right. And so so my mom said, I told her this before she retired, tired, like three years ago, I was like, Mom, you know, everyday, Saturday and retirement. Right? I mean, that’s kind of the same every day Saturday. And she, we were talking just recently, she’s like, You know what, you’re right. I thought I would spend less in retirement, I’m spending the exact same I was spending when I was working full time,

Ryan Fleming 11:37
if not more, because you have all that free time to go to breakfast, go to lunch, you know, try

Dave Befort 11:43
now? Absolutely. Yeah. So you know, think about lifestyle. So. So those are some risks that you need to consider because you are taking on some risk, it’s a little bit of a bet. Right. So a few things have to happen for you to come out on top and that financial equation. So now let’s talk about a different option. You know, I may you and you are big proponents of the Infinite Banking concept, which is really teaching people to create and control the banking function, and their own lives, you know, keep some capital under their own control. Add this as part of what you’re already doing, you know, keep doing what you’re doing, you can add this as a supplement to what you’re doing, which will only create more guarantees and certainty in your life. But I look at this plan. And you know, and this involves permanent life insurance. So we’re talking about permanent life insurance contracts that are specially designed to to accumulate that capital, have access to that capital, leverage it let it grow, compounded, uninterrupted for everyday your life, until the day you die. But attached to that is a huge death benefit. Right, and the life insurance death benefits are paid out income tax free, so you don’t have to worry about the taxes. So it’s a lot, I can really relate this to a survivor benefit plan. But you can start this Survivor Benefit Plan today, instead of waiting until you retire. So if you retire, you’re you’re giving away 20 grand a year? Well, let’s just take that number and start putting 20 grand a year towards this right now. By time you retire, not only, you know, let’s say you’re 35 or 40 years old, by the time you retire, not only will you have more than than what you’ve paid into that thing in available cash value, but you’ll have more death benefit than then your spouse probably will even need. Right, which is a great thing.

Ryan Fleming 13:35
Well, absolutely, especially paying into it for that many years. And what I found conceptually like is that you and I know that this is in everyone’s best interest, it’s whether they can see it or not. But conceptually, when I start talking about, Hey, make this the fixed income portion of your portfolio. And looking at it that way, and regardless of what that asset allocation is gonna look like, but let’s say, hey, we want it to be 20 to 25%, I mean, maybe even 30% of all your assets by the time you retire, when they start looking at it that way. And hey, it’s going to drastically reduce the volatility in your in your portfolio, and you can keep the throttles up on your remaining funds that are invested in the market, it really starts to make sense. And I and I found that conceptually, guys, pilots can see that and they go, Oh, this is awesome. So what you’re saying is not only can the fixed income portion, totally reduce my volatility, it will never lose value. And then all the stuff we’re talking about now is the end. And it does this and it does.

Dave Befort 14:36
Right, well, so let’s just focus on comparing this directly to Survivor Benefit Plan. Let’s say you start putting the same money away now that you’ll be putting away in your pension. Well, not only will you have all of that money recaptured in your cash value inside of your policy by time you retire. Now, you don’t have to give away another 20 grand in retirement. Now you have an extra 20 grand every year that maybe you just use that to get continue funding your policy premium, because at that point, you put 20 grand in there, you’re probably going to create 30 grand in cash value. Like it’s extremely efficient by that point. So it’s a lot like I would say infinite banking is a lot like Survivor Benefit Plan. The differences are one, you get to use it while you’re alive. That 20 grand you’re putting away every, every year, you have access to that, what the cash value that’s created. So it’s not gone. It’s not a sunk cost and gone forever. You have access to it today.

Ryan Fleming 15:36
Well, Dave, what amazes me though, when people put money into even even a taxable investment account, they think of it just like they’re given it away forever, like they can never access it, like it’s a retirement investment, you know, like a 401 k or a Roth or something like that. And that is just not the case. We’re just putting it here, but it is still liquid. Can you talk about that?

Dave Befort 15:58
Yeah. Why? It’s because we’ve been hate to use the word brainwashed. But we’ve been marketed to that think long term, these financial institutions. And I’m not going to lump everybody in together, because there’s some that that actually tell their clients the truth, and that they can’t access funds. And they can do this and that, and there are other things they can do with it. But most institutions, say, give us your money, give it to us on a consistent basis, let us keep it for as long as possible. And when you want it back, take as little as possible back out. Right, they make no mention that, hey, if you need need it, you can get some access to it. Because those companies don’t want, don’t want you to have access to that. So there are, your money’s not locked away. Right? It’s still your money, no matter where it is. There might be some hoops you have to jump through to get it from one place or another. But like you said, that cash, it’s not gone forever. You know, if you’re putting it in a retirement plan, if you’re putting it in the Survivor Benefit Plan. It is it is gone forever. Once you pay that bill, you’re not getting it back.

Ryan Fleming 17:07
He reminds me a lot of term like term insurance.

Dave Befort 17:11
It’s like term insurance. Once you pay that premium, you’re not getting anything back on that ever. The only way to win is to die on time. Yeah.

Ryan Fleming 17:22
I actually tell people that when they when they have a term policy, I’m like, well, that’s awesome. It looks like you’re protected to your 69. But you better be sure you die before then or else. This is all just a waste.

Dave Befort 17:33
Yeah, where it was all? Yeah, it made you feel good along the way. I guess. And I’m not going to downplay term, I have term insurance also, as part of my supplement my whole life insurance, right, until I have enough permanent whole life that I don’t need any more term. So it does a purpose. But it’s not. It is not. It should not be your only form of life insurance. So another thing,

Ryan Fleming 17:58
what are the numbers on term? Now? How often does a term policy pay out?

Dave Befort 18:02
About 1% of the time? It’s a huge moneymaker for life insurance companies? Because they almost never have to pay it

Ryan Fleming 18:09
out. Yeah, cuz people either stop paying it they live past that term, that 20 years or what have you.

Dave Befort 18:17
Yeah, yeah. And by the time you’re 69, you’re not going to re up for another policy, because that term, and nobody’s writing that check. For all year long term insurance expensive, it must be by then. Yeah, and it gets more expensive every year. So where as properly designed whole life insurance gets less expensive over time. And in fact, you can eliminate your premium altogether. And your cash value and death benefit will continue to rise. So

Ryan Fleming 18:42
let’s see, that’s a crazy part once you understand how this truly works, because, you know, of course, when people hear whole life insurance, they it’s gotten a bad name for many, many years. Yeah, but once they understand what we’re doing is something totally different. I get excited to put more money in my policies, I get excited for that anniversary, so I can dump more cash in there. And those dollars are gonna make me money forever. Like I get excited about it.

Dave Befort 19:05
Yeah, me too. In fact, I’m, I’ve got on my whiteboard up here, one of my tasks is to open up for more policies for for my kids. So, you know, time to, I’ve got my capital needs to reside somewhere. I paid all of my premiums, I repaid all my loans, and I still have cash sitting in somebody else’s bank. That’s a no no for me, that cash needs to be sitting in my own bank, which is inside my property design policies.

Ryan Fleming 19:31
Well, that’s how you can tell when somebody actually gets it or not.

Dave Befort 19:35
Yeah, yep. So another another way, this system, infinite banking is, is superior, in my opinion to the Survivor Benefit Plan is your family will will get way more than just half of your income after you’re done. In fact, they’ll get multiples of your income. So there’s, you know, in the form of that tax free Death Benefit payout. And then finally, you know, one of the biggest differences, you take none of the risk. With the Infinite Banking plan with a whole, properly designed whole life insurance policy, you’re taking none of the risk, all that risk is transferred to the insurance company. With the Survivor Benefit Plan, we already taught you are taking the risk, you’re taking the risk of your spouse dying before you, that’s a risk, you know, and then you get no money, taking the risk of your spouse dying very quickly after you die. In which case you don’t you know, that money doesn’t come back. And then if you know, if there’s no spouse remaining, do your kids get anything? No, I don’t think so. Maybe there’s some stipulation some some way, like a special needs child, you could do something like that for Survivor Benefit Plan, but there’s no legacy that that’s going to leave for your children or your grandchildren were properly designed whole life insurance is going to leave a creek, it’s really going to start a generational legacy for kids, grandkids, and so on.

Ryan Fleming 21:01
Well, absolutely. And do you mind taking a second and just we know the dynamics of what we’re trying to present here and what we’re trying to explain and get our listeners to understand, can you just give us a basic idea of what this would look like? Like, let’s say you’re, let’s say you’re 45 or 50 years old, let’s say we start something, it doesn’t have to be a huge amount. But we need to start something in your ideal world, because I know what it looks like for me in my ideal world, but the way you would view it, how somebody should start this? And what would it look like by the time they retire?

Dave Befort 21:33
Really the way I say I, I tell people, you can fund up to 30% of your income. And in life insurance premium. That’s a big step. For some people. I’ve got many clients who do that though. Several pilots who’ve seen the light, they they’ve they’ve done the research, they understand it, we’ve had conversations that are like, I make 330 a year on paying $99,000 in premium. And they want to do that indefinitely. That could be a step too far, I say, at a minimum most people do between 10 to 30%. And one of the basic wealth building principles is save 10% of your of your income.

Ryan Fleming 22:13
Right. And I think that’s very comfortable. I think most people are used to saving 10%. But hey, you’re about to get a 30% Raise, or you did with this new contract. So then, hey, what are we doing about where we’re going to earmark that?

Dave Befort 22:27
Well, and that premium becomes easier to pay every single year as a pilot, because you’re making more money every year. Right? So that premium now that $20,000 Premium was 10% of your paycheck? Shoot a couple years from now, it’s only gonna be like 7% of your paycheck, you know, and then 5%. So it becomes easier to pay overtime.

Ryan Fleming 22:49
Well, we’ve, we’ve talked in the past about how you don’t know what you don’t know, every single one of these dollars is actually going into a vehicle that’s going to be tax free forever. And I’ve found myself saying to so many guys, as they’re getting closer and closer to retirement to go, you don’t you’re not going to have a money problem in retirement, you’re going to have a tax bracket problem. Yeah, for sure. And it’s hard when you’re 40 or 50, to see that. But being a being a financial adviser, I mean, I see it and I see what’s going on. And I deal with people that are in retirement right now not even touching their 401k. And they have a massive tax issue coming down, coming down the pipe. And I

Dave Befort 23:28
think that’s the case for a lot. I was talking to one of your clients this week, maybe yesterday or the day before? Is it just gonna live off of his FedEx pension and his military pension, and not even touch the 401k until he hits 72? And he has to? So I was like, Well, what a great idea. And then you have ideas on how to fund that premium in retirement. In fact, I’ve got a whole podcast episode on how to fund the premium and retirement, which you can do. I mean, this guy was talking about not even taking Social Security, like, Well, you take Social Security now and just use that to fund the premium.

Ryan Fleming 24:02
Well, and actually, after retirement, depending on what tax bracket, they’re in that between the time you retire, and then when the RMD start coming down the pipe for you. You want to start moving money from those tax deferred accounts and get them somewhere else, which Why not a tax or a tax free account prior to RMDs? Or you’re gonna get stuck with that big bill whether you want it or not.

Dave Befort 24:25
Yeah, you and I are so aligned on that. That’s the exact conversation we had. I was like it’s actually to your benefit to start reducing that 401k account before you hit RMD age. Because then you get they’re gonna make you take out what 40 5060 grand a year. I don’t know that and you’re like, Well, I don’t even need that. I’m living off 180 For my two pensions. I don’t need that extra 50 Well, doesn’t matter. You got to take it anyway.

Ryan Fleming 24:51
And oh, by the way, you’re in the next higher tax bracket now which Ontario’s what it might be by then I mean, we might be have 40 or 50% tax brackets

Dave Befort 24:59
yo are historically low right now. You’re in a book right now called taxes have consequences. And it’s really interesting where historically low. And what’s funny is like the top earners, doesn’t matter what the tax brackets are, they pay, they figure out a way to only pay 20 25% in taxes. Because they have the means to have the CPAs attorneys figure it out for him. And retirement, you’re not going to want to spend the money to figure out how to eliminate your tax and you’re not going to have a lot of tax deductions in retirement right? Probably don’t have any more kids you can claim on your child tax credit. You may not have a mortgage on your house anymore. So no mortgage insurance, and just so many things that that you take for granted right now that you won’t have in retirement. So you’re talking, you know, 100% of your income being taxable. Wouldn’t it be nice to have a large amount of capital you can pull from completely tax free, which is what these Whole Life policies allow you to do?

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Ryan Fleming 27:26
You’ve talked about being brainwashed earlier. Everybody’s been told that they’ll be in a lower tax bracket when they’re in retirement. And the reality is it’s not happening. I mean, we live the reality as people hit retirement and especially if you have pensions. Yeah, you are not in a lower tax bracket.

Dave Befort 27:43
Yep. And then you start taking Social Security. And then what 80% of that is going to be taxed right away. Not funny, like we pay Social Security taxes, and then we pay taxes on getting that money returned to us. So the government gets double?

Ryan Fleming 27:59
Well, if you read any of my books, it’s the biggest Ponzi scheme that has ever been developed.

Dave Befort 28:04
Yeah, it’s, it said it’ll just continue, because it’s political suicide to cut off social security. But that doesn’t mean in my opinion, that doesn’t mean they’re not going to come for you. Big earners, you high earners. You guys, you’re making way too much money. You don’t need all that money. So we’re going to cut your Social Security benefits drastically, because you don’t need it.

Ryan Fleming 28:27
Well, it’s going to happen. And you know, we know there’s going to be it’s going to be a reduced amount. I know that. I mean, that’s happening no matter what. But I do think it’s going to be means tested at some point. Well, hey, Johnny, it looks like he did a really, really good job saving for retirement, we see all these other tax deferred assets you have. You don’t need social security. We’re gonna give it to Dave over here. Sorry, I didn’t mean to use Dave.

Dave Befort 28:48
Dave planned well

Ryan Fleming 28:52
for retirement, isn’t that

Dave Befort 28:53
the way it always works, though, is like, you know, oh, hey, we’re gonna forgive your student loan debt. Oh, well, what about all the parents who worked really hard to save and pay their kids college? You know, or they were? They’re supposed or the kids worked really hard and paid it off? Right?

Ryan Fleming 29:07
Yeah. Those that went into the service to get a free education, those that worked through college and have three jobs to pay off their debt. And then suddenly, you’re going what?

Dave Befort 29:17
When I talk about creating some animosity between between folks that didn’t need to be there?

Ryan Fleming 29:24
Yes, absolutely. Well, God, there’s so many things about these topics that I just feel like, oh, and we could talk about this. And we can talk about that. One of the big things I’ve been working on here recently is trying to explain and make a video about how this naturally, not only does it fix the Survivor Benefit problem, but it actually fixes the hole or becomes the volatility buffer. So sequence of returns risk completely goes away.

Dave Befort 29:51
Right, right. And that’s a big one. that not enough people know about. Absolutely. Yeah. I mean,

Ryan Fleming 29:59
one 22 made it real for people that they could see, hey, you know, what if? What if I retire, right when the markets are down? 20%. And that was only one year? I mean, they’ve they’ve recovered this year a decent amount. But what if you have multiple years of down returns and, and too many people have too much of their assets tied up in the s&p 500. And we had the last decade from 2000 to 2010, where it made no money. Right? You want to talk about blowing up a whole retirement plan?

Dave Befort 30:29
Yeah, yeah, that’s that man. And the truth is, there’s, there’s probably going to be a down market at least every five years, on average, every four years. So if you’re gonna live 20 years in retirement, or even 30, because people are living into their 90s These days, like, that’s a lot of down years. And if you’re taking money out of that plan, while it’s down, you’re selling low, instead of selling high, you know, like, like, everything’s predicated on your selling low, who, recovering from that it’s not possible, you just can’t, you don’t have the time remaining to do it. So, like you mentioned, volatility buffer, if you have a stack of capital over here, inside your whole life insurance policy, and you can access all of that capital, all the growth on that capital over the years that’s accumulated completely tax free. Well, you don’t need to take money out of the down market, you just stop taking any withdrawals, go over here and take your tax free income until the market rebounds. And Ryan says it’s safe to take money out again.

Ryan Fleming 31:34
So absolutely, no, and it works like a dream. It really does. Once you start building it out, and see it actually doing its thing. I just my job is to educate people and show them and get them to see it. And you’ve heard me say this multiple times already said it on this podcast. I know it’s in your best interests. I’m not trying to sell you this. I know it’s in your best interest. I just need to educate you and show you enough so you can see it. Because once you conceptualize it, then you’re on board with it. And I wanted to ask you about this because you’re the expert on on these IBCs policies, these overfunded Whole Life policies. And, and yes, I know a considerable amount about them. But this is your world. And I’ve heard people talk about how the two questions to ask yourself, number one I’ve heard of be called a Roth or a Roth IRA on steroids. But also the question is, if you could put an unlimited amount of money into a Roth IRA, how much would you put in there?

Dave Befort 32:32
Yeah. If you know that every dollar you put in was gonna get returned to you. And then returned in in multiples to your family? How much would you want to put in there? So I hate comparing this to a Roth IRA, actually, because the big difference is a Roth IRA, you’re still in bed with the government, life insurance, you’re not life insurance is completely outside of the purview of the IRS. Your money goes in there after tax. And, and it’ll never be taxed again, it’s essentially blind. To the IRS, you could say so and you have access to it, you can do whatever you want with it. No, Roth IRA IRA is a is another great bucket of tax free retirement income, the difference

Ryan Fleming 33:16
that is so huge, like we know tax, never money’s the best kind of money. And I think the average person walking down the street knows, hey, I want more Roth money, I want more money in that tax never bucket. But what we haven’t even talked about as we’re comparing these, when you put money into your Roth IRA or your Roth 401k, it’s gone until you retire 59 and a half, or you’re gonna get a huge penalty for it. Well, we’re talking about doing you put your capital into this tax free bucket, but you can use it every single year whenever you want for whatever you want to live from now until you retire.

Dave Befort 33:51
Right? Do you think between now and retirement, if you’re 45 years old, you think there might be an emergency that pops up in the next 20 years that that was completely unexpected? I’d guarantee it. You think you might need some access to capital to get through that emergency, maybe it’s a furlough, maybe it’s a strike, maybe, whatever. There’s a lot of things that can happen between now and then maybe it’s a huge medical event, but having access to that capital without being penalized. And not only this, you can access that capital, and you’re still earning on it even while you’re using it. So that you never lose the uninterrupted compound growth of that cash, even while you’re leveraging it.

Ryan Fleming 34:36
Well, and I think that that’s where we, you know, getting people to understand that I think you you get the whole we’ll continue to talk about these on podcasts. Wait, wait, wait, I gotta pay to get my money back. It’s just it just blows my mind that that we’re able to get this much money into a tax free vehicle, still use it for things that come up, and it’s going to continue to grow on however much we put in and I Ask people all the time we we have huge liquidity problems with a lot of clients. And then one of my questions is, I want to know how were your liquid security isn’t gonna go, Well, what are you talking about? And I go, something just happened because it will. And we need $60,000 Where’s it going to come from? And you will I

Dave Befort 35:17
got half a million dollars of equity in my home. Okay, good. Good luck get into that when you need it.

Ryan Fleming 35:23
And rates right now guess what you’re gonna pay even if you can get that HELOC,

Dave Befort 35:27
it’s gonna be eight 9%. Right now on a on a HELOC easy,

Ryan Fleming 35:31
right and it adjusts no matter what. Yeah. So unfortunately, the most of the time I get not my clients that I’ve gotten I’m going going down the right path. But in many cases, I get the deer in the headlights look.

Dave Befort 35:42
Yeah. Yeah, that’s a great question to ask, where’s that money gonna come from? You know, it’s almost as if the future is unknown. And we don’t know what’s gonna happen.

Ryan Fleming 35:54
But yeah, we feel very comfortable leaving, you know, for those that do have some liquid security, we feel very comfortable leaving it sitting over in a savings account. You know, I call it going broke very safely. Because you’re not even keeping up with inflation. Yeah, but yet we feel so comfortable doing that, but it seems hard to do what we’re talking about.

Dave Befort 36:14
Yeah, we’re gonna have a whole nother episode on why life insurance companies are safer than banks. Even historically, and why that is, but uh, yeah, my, my money for my money, way safer and way more benefits, keeping it inside my life insurance contracts, as opposed to in somebody else’s bank. Well, let’s earmark

Ryan Fleming 36:35
that for another episode. We’re actually already in trouble. I promised my, my listeners, I tried to stay around 30 minutes. We’re past that already. But you get

Dave Befort 36:45
me talking on something as sexy as life insurance. Man, I’ll keep going. You got to cut me off.

Ryan Fleming 36:50
Well, the funny part is, I feel like every time we get on a podcast to talk about this, it can go everywhere. Because there’s so many different benefits. It’s not a one, one tiered conversation. It really can help you with so many different things in retirement or even like we were just talking about in day to day life right now, not only protecting your money, letting every single dollar you’ve ever made grow for you for the rest of your life, and still have that liquidity. It really is a a great and, you know, we all have different differing opinions on exactly how to say it. And I know we shouldn’t ever compare it to an investment but I think it is a very, very sexy asset class.

Dave Befort 37:29
Yeah. And, and a guaranteed asset class.

Ryan Fleming 37:32
So and guarantees 99% of the time. You can’t even use that word. Guaranteed.

Dave Befort 37:39
Right? Yeah. Would my line of work? I can.

Ryan Fleming 37:43
Yeah, you can, you can. And that’s why I bring you on so you can say those things. And Dave, I feel like we have to have you on the podcast more and more. We appreciate your time. I appreciate you taking care of so many of our clients. And you know, we’re gonna continue to try to educate and give people more and more tools to retire. And and what I like to say to land in retirement safely. Let’s do it. Alright, brother. Appreciate your time. All right. You bet. All right. Hey, wait. I want you to say one of your things that you talked about with IBC that you end the show with,

Dave Befort 38:15
hey, control your capital, or somebody else will. All right, brother. Have a good one.

Ryan Fleming 38:19
Thanks for being on the podcast.