One Of The Coolest Retirement Strategies You’ve Never Heard Of | Retirement Strategies in Your 60’s

Troy Sharpe: The holy grail in retirement is to find something that’s 100% safe, has access, and is liquid in case you need your money, but also has the potential to grow. I’m going to show you one of the coolest strategies you’ve probably never heard of that has all of those features, plus more.

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Hi, I’m Troy Sharpe, CEO of Oak Harvest Financial Group, CERTIFIED FINANCIAL PLANNER™ Professional (CFP®), and host to the Retirement Income Show. When you think of the common financial tools that you invest in your retirement, you think of stocks, bonds, CDs, maybe annuities, real estate. Those are pretty much the big ones. None of them are 100% safe, 100% liquid, and also give you the potential for excellent growth. Bonds pay very, very little interest rates. They can also go down in value. Stocks have tremendous potential to grow, but they’re not safe whatsoever. Fixed annuities can give you safe growth opportunity, but typically, you’re limited to 10% of your access per year. Real estate, as we know, real estate is not very liquid.

All of these tools in retirement, they all have their specific purpose, but none of them typically hit those three features, 100% safe, excellent potential to grow, and also liquid in case you need to access your money. I’m going to show you a really cool strategy that has those features, plus more. Before I get into that though, we want to cover a couple of basics.

As I said, what I’m going to show you today is safe, it’s liquid, has the potential to grow, also provides family protection in case you die or need long-term care.

The long-term care component here is a big one. According to a recent study from Fidelity, the average 65-year-old couple in their lifetime will expect to spend somewhere between $250,000 to $400,000 in out-of-pocket medical costs, but guess what? That’s just your Medicare premiums, your copays, prescriptions, deductibles, that’s your out-of-pocket healthcare. That doesn’t include long-term care. Long-term care is a completely separate cost in retirement. Right here in Houston, you can have a long-term care facility for $5,000 a month today or $25,000. My personal story with my grandparents, they went into a situation where they were spending $10,000 a month for a couple of years at a nursing home, so I understand the impact that this can have on your retirement.

This feature in this particular strategy it’s a pretty cool feature to have. The returns are pretty simple here with this strategy. It’s an index strategy, so this means that your principal is 100% safe, but you’re going to make between 0% and 8% based on the S&P 500. Just bear with me on this, this is not an annuity. How does indexing work? If this is the stock market here and these lines here are 12-month increments, if the market goes up this first year, you get 100% of the gain up to 8%. Those gains are locked in. You can never lose your interest, you can never lose your principal. The next 12 months, the market goes up, you get 100% of the gain up to 8%. This is called a cap.

The next year, the market goes down, will your money simply go sideways? You don’t earn anything, you don’t lose anything. The following year when the market starts to rebound, you don’t have to wait for it to get back up to where you left off, you start earning interest from right here where you left off. When the market goes from here to here, you go from here to here, subject again to this 8% cap. Market goes up again, you make some interest. Market comes down, you go sideways. This is indexing. Very simple concept. You make between 0% to 8%. This is how the money that you deposit, this is how it grows over time.

Now, let’s the market is down every single year forever, which is really unlikely. If that happens, we have much bigger problems, but worst-case scenario, this strategy comes with a minimum 2.5% guaranteed interest rate. There are some expenses included in this strategy. What I’m going to do is pull up the actual company illustration, and we’re going to look at the current assumption first. This is what’s most likely to happen. Now, it’s not fully guaranteed, at least the performance because the stock market could go down. If the stock market goes down, remember, worst-case scenario, your principal is 100% safe, you’ll make 0.

We’re going to look at other scenarios as well, what happens if the stock market is always down, and then what happens in the maximum expense situation. Here we go, this is a 64-year-old male depositing $250,000. Historically, between 0% and 8% tracking the S&P 500 with no risk of loss, you’re looking at about 5% average growth. We see the count value here, $259,000, $269,000, $278,000, $288,000, et cetera, et cetera.

Now, here is the death benefit. This is a tax-free death benefit. We make that deposit, if we get hit by one of those self-driving cars or the bus comes around the corner, immediately day one, your family gets $534,000. Let’s say, 10 years goes by and you need long-term care coverage. Coming down here, you have about $562,000 of potential long-term care coverage, that is limited to about 24% of the death benefit per year, so let’s call it about $100,000 and $120,000 per year, $10,000 a month roughly of long-term care protection. This is just a safe growth tool.

Yes, this is a life insurance chassis. Some of you when you hear the word life insurance, your brain immediately goes to, “I just need term insurance,” or, “I don’t need life insurance.” That may be true, but don’t think of this as life insurance. This is a financial tool that will protect your money 100% from losses, will give you the opportunity to grow it at a reasonable rate. If you see here the surrender value, there are very, very small surrender charges, but if we have one year of growth, we’re going to be able to walk away with more than what we deposited, not to mention the family protection.

Additionally, there’s one more benefit. Here in Texas, and you’d have to check with your state, any monies deposited into retirement accounts, life insurance cash value, life insurance annuities, or your homestead is 100% protected from lawsuits and creditors, so it’s an asset protection strategy as well.

Again, this isn’t something that you should put all of your money into. That’s not the point here. There are a couple of downsides, and I’m going to look at those in just a second. I want to make you aware of some of these really, really cool strategies that are out there, that if you’re working with someone who is not aware of these, you’re never going to be introduced to this concept. It may be right for you, it may not be right for you, but the point of the matter is, there is something out there that’s safe, gives you great potential to grow, and is liquid, while also providing family and long-term care protection along with asset protection.

If you like what you see today and I’m pretty sure you will because this is a very, very cool strategy, I want you to hit that thumbs up button, but also there’s going to be a link in the description where you can schedule a time to talk with one of our advisors here at Oak Harvest Financial Group.

Pretty straightforward here. If we go down, this is over roughly about a 40-year period. Here’s 40 years, going out to about 100 years old. Let’s just look over here. Let’s look, 84 to 94. We’re about $700,000. The tax-free death benefit about $800,000 here in 94. $500,000, $654,000 at about 84. Again, we deposited $250,000. 100% safe if the market crashes, asset protection, long-term care protection, a reasonable opportunity to grow.

Now, this is what would be the most likely outcome based on historical performance and current charges. Now, what are the charges? Again, for the long-term care and the death benefit, whatever you deposit versus whatever the death benefit is, the difference between those two numbers is what we call the corridor. There is a per-unit charge for that death benefit. This company in the history of 120 years has never charged the maximum allowed by law, but we’re going to look to see if day one they start to, what that means for you.

The cost of life insurance because our life expectancies are increasing, the cost of life insurance has been coming down for years. Assuming the current cost of insurance stays in place, that’s a reasonable expectation.

Over here, what we’re going to look at is current charges but forever the stock market goes down, and you only make the minimum guaranteed interest of 2.5%. Coming back up, we make the deposit of $253,000, the stock market is down every single year, here you go, we see at the end of 10 years, we can walk away with $267,000 worst-case scenario, and we have $431,000 of death benefit.

Now, is the stock market going to be down every single year? That’s highly unlikely, but if it is, you have this guaranteed minimum, 2.5% interest, plus 100% principal protection. Now, what is your worst-case scenario? The stock market is down every single year, and day one you get into this strategy and the life insurance company says, “We’re going to raise the rates, do something we haven’t done in 120 years, but raise them to the maximum allowable by law.” If they did this, this would mean millions and millions of people out there are dying, essentially. Life insurance would be getting more expensive. It’s unlikely, but if it happens, we make our deposit, the end of 10 years, we’re still walking away with $257,000. This is the fully guaranteed maximum charges allowed by law with the minimum guaranteed interest rate of 2.5%.

Now, as you see here, what the life insurance company does is they simply reduce the death benefit, that corridor. If the death benefit is coming down, even if we’re being charged the maximum, we’re being charged less units of life insurance. Again, I want to be careful with the life insurance word, because the purpose of this is not life insurance. If you want life insurance with a much bigger death benefit, there are much better strategies out there. The purpose of this is to have your money safe, liquid, the potential to grow, asset protection, family protection, and long-term care protection. It has all of those features into one tool.

This is a very unique design with a specific product that’s on the marketplace from a specific company. Not all companies can do this. This is something that is very unique as far as the design, the way the life insurance policy is structured. I wanted to introduce you to this concept because again, there are some pretty cool things out in the marketplace.

Takeaways here, don’t be afraid because it’s not a life insurance chassis. That is just the structure of how this retirement product is designed. This is for non-IRA money. You cannot use your IRA money or your 401(k) money for something like this. The purpose again is you want something that’s safe, gives you the potential to grow, is liquid and accessible if you need to get all of your money out, gives you asset protection, gives you family protection, and also long-term care protection. That is the purpose of this financial tool.

All right, guys, that’s a wrap for today’s video. You know what to do, hit that subscribe button, hit that thumbs up button, and we’re always here to keep you more connected to your money in retirement.

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