20k per month?

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Mar 30, 2009 1:05 am

Exactly.  I laugh when someone comments about permanent LI being “too expensive”.  When I ask my clients if they’d rather have more assets or more income in retirement, they always respond “more income”.  Even if they spent the equivalent of 30% or more of their assets to have a large life insurance policy at retirement, they’re still much better off.

  I'm happy others in our industry equate premium to cost.  It makes my job easier when I can show them how money really works. 
Mar 30, 2009 1:48 am

Ice, regardless of whether or not he wants to leave a legacy or not, he will leave money behind.  He has no choice - he can’t live longer than his assets.  He has to decide where it goes.  If he wants to leave all of it to the government, that’s his option.  But I’m guessing there is someone or something he cares about.  And as far as I know, there is no more efficient way of leaving a legacy than using life insurance. 

Mar 30, 2009 1:49 am

Nope.  We don’t have a clue about him.   Based upon the little bit of info that we do have, I happen to think that he is not yet a candidate for permanent life insurance even if he does want to leave a legacy. 

  The reality is that very few people would prefer to not leave a legacy.    
Mar 30, 2009 1:57 am

Lonely, single, and miserable I presume?  I’m asking that as a serious question because it’s beyond my comprehension that someone would prefer to not leave something behind.

Mar 30, 2009 1:58 am

[quote=iceco1d][quote=anonymous]

  The reality is that very few people would prefer to not leave a legacy.    

[/quote]

The funny part is, I have a client that specifically demands that he will not leave a legacy at all.  [/quote]   I would have to ask myself if I wanted to work with someone like this.  I work with people who care for their family or have a cause they feel deeply about.  YMMV.
Mar 30, 2009 2:15 am

I must say that this is one of the better threads that I’ve seen on here in a long time.

Mar 30, 2009 2:46 am

[quote=Ominous]I must say that this is one of the better threads that I’ve seen on here in a long time.[/quote]

Even with YOU here…

Mar 30, 2009 5:20 am

I was just gonna say Ice, I too have a client who does NOT–absolutely NOT–want to leave any sort of legacy (his wife is already well off).  Complains that he worked his butt off for the last 30 years, and the city has never recognized him, his family never recognized him, charities, blah blah blah…

I keep trying to tell him he’s just going to make the government more well off…but he’s really in one of those ruts. 

Mar 30, 2009 11:00 am

That’s the point, guys.  We all have one client who doesn’t want to leave money behind.   This means that 99% of our clients do want to leave money behind.  This means that retirement planning isn’t about having the most money.  It’s about having enough money to live comfortably for the rest of one’s life while leaving money behind. 

  My experience has been clients/prospects who don't want to leave money beind get divorced. 
Mar 30, 2009 1:08 pm

Nearly every couple I meet with is concerned about “leaving something for the kids.”  Now, when they realize that they are strapped for retirement, they will often make frustrated comments like “we need to worry about ourselves” or “the kids will be fine” or “we give them a lot already”, but they all end up conceding that they feel strange not leaving anything.

  The other funny thing is, you can't plan to spend every last penny, since you have no idea when you are going to die.  Otherwise, you could just ammortize out your money to when you "know" you will die.  So you pretty much have to plan to have some money left at death (final expenses aside).  I would guess that most people that plan to spend "every last nickel" will end up going broke too young.
Mar 30, 2009 1:26 pm

If I were you I would show him the business card of someone who is capable of developing a logical plan rather than hanging it out on a message board.  Do you cover this technique as part of your value proposition to the client?  Put it on a powerpoint and if you want to close the deal today, let him/her know that you watch both cnbc and cnn (two tvs in your cubicle will make it look like the Pentagon Command Center).

Mar 30, 2009 1:27 pm

It's not just about leaving something for the kids.  Plenty of times, the kids are in a better financial than the parents.  

The one's who plan on spending every last nickel can do it by annuitizing their money and not leaving a survivor option.   Even if they don't care about leaving money for their kids, we can't forget that they do want to leave money for their spouse.  Therefore, a legacy is still needed.  It's just that it's for the spouse.   Joe is 70.  Mary is 65.  They want the greatest possible guaranteed income for the rest of their life.  They have $1,000,000.  They can annuitize the money and have an income of $5700/month.   Tom is 70.  Sara is 65.  They want the greatest possible guaranteed income for the rest of their life.  They have $1,000,000.  Tom has permanent life insurance.  They can annuitize the money based upon Tom's life expectancy and have an income of $7500/month.  This is 31% more income.  When Tom dies, the income stops, but gets replaced with the life insurance.   What we find is just like B24 is describing.  People who aren't leaving money for their kids/charity would really like to do so, but the reality is that there own finances make it a secondary issue.    
Mar 30, 2009 4:33 pm

Back to the original post:

I have a number of stories of clients who started making serious money in their job, and then decided to go it alone.  It's kind of like the guy who has a good night at the blackjack tables, and considers becoming a professional gambler.   So far, only ONE guy has pulled it off. After one of my clients quit his $250k+ yr job to start a consulting company, his wife literally emasculated (sp?) him in front of me complaining that he was now only making like $20K/yr!  He just stared at the ground, it was horrible.   You may want to advise your client to stick around a couple of more years to bank some of that cash before he hangs out his shingle.
Mar 30, 2009 7:49 pm

[quote=now_indy]

   his wife literally emasculated (sp?) him in front of me    [/quote]   I'm hoping she figuratively/verbally emasculated him in front of you.  That literal emasculation can really be hard on your office carpets.  Plus, the screaming can be distracting, and then there's that awkward moment when you have to say, "Please don't leave that on my desk..."
Mar 30, 2009 7:56 pm

[quote=2wheeledbeemer][quote=now_indy]

   his wife literally emasculated (sp?) him in front of me    [/quote]   I'm hoping she figuratively/verbally emasculated him in front of you.  That literal emasculation can really be hard on your office carpets.  Plus, the screaming can be distracting, and then there's that awkward moment when you have to say, "Please don't leave that on my desk..."[/quote]  
Mar 30, 2009 11:00 pm

ok, you got me. His testicles were still attached, but I would have sworn they were in her pocket.

Mar 31, 2009 12:05 am

Thanks, all
Talked to the guy’s wife. Going to move on getting disability. Going to do 25k a month – a third muni funds, a third emergency money, a third equty (funds, I need to do some homework on the tax issues of this.)
Laid out goals and expectations. Smart lady. Asks good questions and gives you the solution before you even sell it.
now-indy, I think he’ll be fine with the transition. He’s been preparing this for years. Right now, he buys widgets in China and sends them to stores in the U.S. And neither the Chinese factory guys nor the American store owners care what company is on his business card.








Apr 5, 2009 2:07 pm

Sorry, did you say you’re maxing out two traditional IRA’s?

Seems to me your guy is way north of the AGI cap…


Apr 5, 2009 2:10 pm
Wasabi Avenger:

Sorry, did you say you’re maxing out two traditional IRA’s?

Seems to me your guy is way north of the AGI cap…


http://www.irs.gov/pub/irs-pdf/p590.pdf   See page 15 and you'll read where AGI only affects your contributions when you are covered by an employer-sponsored plan.