Could Traditional Financial Advice Be Outdated?
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The Richness of Life
WealthFINANCIAL GROUP
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Jim Kipp
Jim KippFinancial Strategist
Kipp Wealth ManagementEagle, WI
262-646-4443
www.kippwealthmanagement.com
Since 1985Over 24 Years
of Experience!
Milwaukee Magazine
About Your Presenter
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Jim Kipp
Kipp Wealth Management
Pam Kipp
Jenni Teschendorf
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What You Thought To Be TrueTurned Out NOT To Be True
What If …
When Would You Want To Know?
Especially When It Comes to Your Money & Investments!
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A New Approach To Building Wealth
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Could Traditional FinancialAdvice Be Out of Touch Today?We’ll Be In A Lower Tax BracketExcessive Risk for Higher ReturnsDiversify – Large Cap, Small Cap Etc.
Maximize Contributions To 401(k) Plans, SEP Plans & IRA’sGet Your House Paid Off By Retirement
Your Pension Is Sacred
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Greatest Threats To Your Wealth Wealth Transfers
Taxes
Market Risk
Inflation
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The Silent Thief - Inflation
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Actual Income Needs Projection
Income adjusted for a 3.3% estimated rate of inflation
$35,000 $41,168 $48,424 $57,750
$50,000 $58,812 $69,179 $83,500
$75,000 $88,219$103,768
$125,250
Now 15 Years10 Years5 Years
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Inflation Undermines Life and Legacy
• Be willing to accept a lower lifestyle1
• Dip into and use up existing assets2
• Go to children or government for help3
• Go back to work4
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The Mathematics of Losing Money in the Market
When does -40 + 66 = 0 ?
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It’s Easier To Lose Money Than to Make It Back
$100,000
$60,000
$80,000
+25%-20%
-40%
+66.6%
$50,000-50%
+100%
Break Even
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III. Safe Strategies That May Help You
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The Oracle of Omaha
Warren Buffet’s Rules for Investing
Rule #1: Never Lose Money
Rule #2: Never Forget Rule #1
Source: http://www.wordpower.ws/quotations/warren-buffet-quotes.html
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Asset Allocation Made Simple
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Red Money vs. Green Money
Green Money is Safe Money Red Money is Risk Money
Red Money is Risk Money
Green Money is Safe Money
Green Money is Safe Money
Red Money is Risk Money
Accumulation Years
Distribution Years
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The Rule of 100
Green Money
65%
Red Money
35%
100 – Age = % Red Money
Red Money
Green Money
100 – 65 = 35% Red Money
This is just a general guideline and individual situations vary
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Upside Down Planning
Green Money
Red Money
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Example $200,000 Age 65
$130,000
$ 70,000
$180,000
$20,000
Reposition $110,000
100-65 = 35%
Asset Allocation in a volatile market is critical for efficient money management
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Product Allocation
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Basic Product Class Options
Money Market
FixedIndexed
Annuities
CD’s Treasuries
Fixed Annuities
Variable Annuities REITs
Stock Bonds Mutual Funds
Derivatives
Every product has plusses & minuses and a proper use in your planning!
Lower Risk Higher Risk
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Typical Product Allocations
CD’s
Stock Bonds Mutual Funds
CD’s Treasuries Municipals
Market
Seeking Greater Safety
Seeking Higher Return
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Three Worlds of Investing
Fixed IndexedInsuranceAnnuities
Personal Protected
Pension Plans
Bank CD’s
Govt. Bonds
InsuranceFixed Annuities
Mutual Funds
Brokerage Account
VariableAnnuitiesInsurance
Safety/Guarantees Hybrid/
Indexed
Risk/Market
1. Principal is guaranteed2. Interest is guaranteed3. Short term & liquid
Potential Return: .5% to 2%
1. Starts with the guarantees from the world of safety2. Links growth of the world of the stock market as an index
Potential Return: 0% to 30%
1. Principal is NOT guaranteed2. Interest is NOT guaranteed3. Need TIME on your side
Potential Return: -40% to +40%
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Who Owns Annuities?
Federal Reserve Chairman Ben Bernanke
Keeps Personal Finance Portfolio Simple
Tuesday , July 31, 2007WASHINGTON —
The Fed chief's largest assets last year were two annuities
$1,000,000
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February February February February February February February February February February February April1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009
$45,000.00
$65,000.00
$85,000.00
$105,000.00
$125,000.00
$145,000.00
$165,000.00
$185,000.00
$205,000.00
$155,475.41
$178,796.73
$63,358
$85,628
Index AccountS&P 5000% 0% 0%
0% 0%
$100,000
109 % More!
- 4.46% Average Re-turn
- 1.40 % Average Re-turn
+ 5.98 Average Return
Dec
10.03%
15.0%
5.12%6.40%
9.85%
15.0%
-9.26%
-10.74%
-24.0% -40.86%
6.40%
5.12%
9.85%
-5.42%
35.15%36.12%
$100,000 In Market Compared To Fixed Indexed Strategy
$110,030
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Will Rogers Said …..
“It’s not the return ON my investment that I’m concerned about…“It is the return OF my investment.”
Will Rogers
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Asset AllocationIncome for Life Strategies
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Personal Pension Lifetime Income Benefit Riders
$100,000
$110,000
10% BonusLinked to an
Index like the S&P 500
Index at 1000
Index at 900
Break Even
Positive Gain
1 2 3 4 5 6
8%
8%
8%
8%
8%
All income guarantees are based on the claims paying ability of the insurance company.
Income Rider must be selected at time of application for withdrawal benefits feature, of “Life Only” annuitization option must be implemented by annuity contract owner. Life Only payout option may offer limited or no flexibility after implementation. Annuity contracts can provide long term streams of income payments based on the annuitant’s age and o f amount of premium applied to the contract.
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Personal Pension Laddered Vision Income Programs
Leg 1: Immediate Annuity @ 1.5% annuitization rate; Leg 2: Fixed interest annuity @ 4.25% guaranteed for 5 years; Leg 3: Deferred Fixed Index Annuity estimated @ 5.5% Leg 4: Deferred Fixed Index Annuity estimated 2 6%.
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1. Lower?2. Same?
3. Higher?
Will Future Tax Rates Likely Be
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A Wake Up Call
“We are heading to a future where we’ll have to double federal taxes or cut federal
spending by 60%.”Former Comptroller General: David Walker
http://www.youtube.com/watch?v=QxoP_9W6FC8
Single Click on Link Above – 8 minutes
60 Minutes Interview
2007
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U.S. Bailouts!
$700+ Billion!
$11 Trillion
$3Billion
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Double Stacked Pallets of $100 Bills
One TrillionDollars
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SuddenImpact
“As a country, we’ve hit an iceberg, we’re taking on water,
and the band plays on as if nothing has happened!
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IRA Tax Strategies
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Your IRA, pension and 401(k) benefits will be taxable at retirement, probably at a higher tax rate.
Is Postponing Tax Really The Best Idea?
MF p.236
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Whose Retirement Are You Planning Yours or Uncle Sam’s?
$ 350,000 IRA Age 61
Over 20 Yrs RMD’sYou Pay Uncle Sam
$ 280,852
At Your Death Uncle Sam
Receives Another
$ 328,268
Total Tax Paid To Uncle Sam
$ 609,120
Assumes Growth Rate Averaging 6% Annually IRA Balance Age 90 is $713,626
CongratulationsYou’ve Become The
Perfect Tax Payer!
But, What About …Future Taxes &Estate Taxes?
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“The Front 9 is where you position yourlead by building up your assets and theback 9 is where you protect your assetsfrom excessive taxation and where youwin or lose!”
“What good is making even a 50% rate of return on an investment if, at the time of withdrawal taxes will step in to claim 70, 80, or maybe even 90% of it?”
--Ed Slott, America’s IRA Expert “The Tax Savings Time Bomb”
IRA/401k Tax Time Bomb!
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The Four Tax Buckets
IRA, 401k,
TSA, 403b
Roth IRA Income Tax
Free Investments
Maximum Insurance
PlanSDLI
Ordinary Assets
and Income
Taxable Tax-Deferred
Income Tax Free
Estate Taxable
Income Tax Free
Estate Tax Free
For greater tax efficiency Move money further to the right
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Get Your Confidential IRA Tax Recovery Analysis and Report
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Creating Generational Wealth
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The Family Legacy They May Need Your Help
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1. Use the least amount of money to create the greatest amount of wealth.
2. Guarantee that the wealth will occur & transfer tax free.
3. Create multiples of wealth immediately using safe leverage.
Wealth & Wisdom Institute
Three Basic Rules For Investing
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Creating Generational Wealth
$36,800$36,800$36,800$36,800$36,800
Survivor Indexed
LifeTax Friendly
Tax Free Asset
$ 184,000
Reverse Mortgage$ 184,000
(No Monthly Payments)
$184,000Into BucketOver 5 Yrs.
Can Provide•Tax Free Income•Emergency Fund•Vacation Fund•Education Fund•Legacy Planning
$ 609,260 Death Benefit
At Death $ 609,260
Tax Free to Heirs $ 184,000 To Pay Off Mortgage Leaves Them $ 425,260 Net + Sale of House
Fair Market Value$350,000
Couple Ages 65/64
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New Cash Contributions Compound Interest
Ages 66 & 64
7.00%
Total Premiums Allowed:$ 180,000 GSP
Minimum Death
Benefits Required:
$ 609,260_
Insurance Mortality and Expense Charges
1.5%
TEFRA 1982DEFRA 1984TAMRA 1986
Corridor dictates the minimum death benefit required based upon the insured’s age and gender to accommodate the ultimate desired aggregate premium basis.
Year 5
Year 4
Year 3
Year 2
Year 1 $36,000
$36,000
$36,000
$36,000
$36,000
IRA’s, CD’s, Investments,
Annuities,Home Equity
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What IfYou Could Create An Asset
No Market Risk To Principal – Growth S&P 500
Has Liquidity
Tax Free Growth & Tax Free Withdrawals
Can Avoid Estate Tax – Avoids Probate
Complete Control of Asset
Passes Tax Free To Family Members
Protected From Creditors
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“Life Insurance, is not only the single biggest benefit in the tax code, but it is also the most cost effective way to protect a large IRA!”
“Life Insurance and Income for Life, a perfect Estate Plan!”
--Ed Slott, America’s IRA Expert
Ed Slott
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III. The Wealth Experience Method
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Key Question:Is there a good step by step process through which I can
make better financial decisions?
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The Seven Step Retirement Checklist
• Personal Wealth Index1
• Four Financial Cornerstones Analysis2
• Income for Life Plan3
• Total IRA Review4
• Long Term Care/Medicaid Options Review5
• Essential Documents Review6
• Tax Efficient Estate and legacy Options Plan7
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Helpful Decision Making Reports
1. Take Your Wealth Index
2. Walk through our Wealth Experience Workbook
3. Receive valuable planning ideas and timetables
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Take Your Free Wealth Index Survey Now
Log On To …
www.wfgnetwork.com/jimkipp
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Thank You!See You Soon