The Airplane Metaphor

You know how people take more time to plan their summer vacation than to plan their retirement? And they think their retirement destination must include travel by means of sending extra principal payments to their mortgage banker and socking away hard earned money into tax-deferred, qualified plans like IRAs and 401(k)s.

Well, what we do as your lead advisor and retirement planning “travel agent,” is start by first asking you where YOU want to go, how soon you want to arrive, and how long you will stay. We help you maximize your retirement savings through tax-favored deposits, tax-free growth, access to your money tax-free, and we enable you to pass on your estate to your heirs tax-free and without federal income tax, estate tax, or probate. What a great way to fly towards your retirement destination. Don’t you agree?

Proper retirement planning is very much like designing an airplane. For the plane to fly it must have four natural forces at work: Lift, Thrust, Drag, and most important Weight.

LIFT can be compared to the power of compound interest working in our favor. Many people “stall” their financial future by letting the weight of credit card debt and negative compound interest overcome the lift of positive investment compound interest. With too much of the wrong kind of debt, you financial plane will literally fall out of the sky.

THRUST is created by the engine and propeller that PULLS the plane forward. This is like tax-favored deposits and tax-deferred accumulations. These advantages “pull” taxpayers into saving for their own retirement. That’s good. BUT far better is the trust generated by the PUSH of a jet engine. Tax-favored contributions followed by tax-free accumulations, tax-free distributions, and tax-free transfer thrust your jet-air-craft toward your retirement destination. You arrive sooner, more refreshed and in the BEST shape financially.

DRAG in your personal finances is the power of safe, positive leverage using Other People’s Money (OPM). This is as difficult to understand in finances as it is in the physics of aviation. In air plane design, it is simply a form of friction. But without this friction, the air would not slow down as it goes over the top of the wing. Therefore, without drag there would be no lift.

Borrowing Other People’s Money using SIMPLE interest and with an interest only loan creates the least amount of drag. This, coupled with the COMPOUND interest found in a properly structured, non-qualified, retirement planning alternative to tax-deferred IRAs and 401(k)s, produces the incredible LIFT that is needed to take you over the rocky, dangerous mountains of stock market investing and safely through the clear blue skies of asset protection towards your final retirement “vacation” destination.

While we’re on the subject of drag or friction, please remember that people are going to give you “friction” about the “lift” you now feel from your new found understanding of paying simple interest to earn compound interest. Drag is hard to understand in aerodynamics and it’s hard to understand in personal finances. Your friends and family just don’t know what they don’t know. But YOU understand where you want to go on your retirement trip to wealth accumulation and asset optimization and this is the best weather report you could get from the control tower.

Let’s face facts. It IS a “drag” to pay interest on a mortgage. But real estate can be a fantastic leveraged investment. The use of Other People’s Money for safe, positive leverage in a real estate transaction is the key to wealth accumulation.

WEIGHT is the fourth and final natural force in aerodynamics. Without a doubt: Taxes and Inflation weigh us all down! But taxes and inflation are the “baggage” that MUST be carried on our flight toward our retirement destination. Taxes really are not bad anymore than luggage is bad. The real problem is carrying TOO MUCH. We all know what a huge pain it is to carry too much luggage. But we can have a more comfortable retirement with fewer hassles if we use a creative means of minimizing this baggage of taxes and inflation.

In aerodynamic design, special consideration must be given to weight. The structural design of the plane is the key. It cannot be made from light weight paper or from heavy weight steel. It must be strong enough to withstand the turbulence of stock market conditions and also light enough to fly over the down drafts of market losses. How many people have suffered “paper losses” from their stocks? Many were attracted to the strength of their US Steel stock and held onto it too long. They lost everything when that solid “heavy weight” fell out of the rarified sky of leading Fortune 500 companies.

In the same way, the design of your properly structure Indexed Universal Life (IUL) contract is also key. When designing this “means of transportation to your retirement destination,” special consideration must be given to tax codes 72e, 7702, and 101 and also the legislative mandates of TEFRA, DEFRA, and TAMRA. When carefully designed, this IUL plan absolutely takes off.

The biggest problem folks have with life insurance is the cost. If the HR director of your company proposed that you now have the benefit of FREE life insurance and then asked, “How much do you want?” You’d probably say, “As much as I can get!”

The cost of insurance is like the fuel on the aircraft. You need enough jet fuel to last the whole trip but not too much! Better yet is having a bit left over so that flight conditions and delays don’t burn up too much of this precious commodity. Fuel adds to the weight of the plane. Cost of Insurance (COI) adds to the weight of the plan. You’ve GOT TO HAVE IT if you every hope to get the plane (or plan) to leave the ground – but too much fuel is too much weight. Safely minimizing the COI will make your alternative retirement savings vehicle really take off. Without the COI you do have insurance and without insurance you do not have the tax advantages that come with life insurance.

Oh, one last thing. Before you can reach take off speed, your retirement “plane” must taxi out onto the run way and roll down the air strip. You will gain the speed you need to get this retirement “vacation trip” off and flying if you will attend a public seminar, read a book, listen to a CD, watch a DVD, or meet one-on-one with your TEAM trained Missed Fortune Advisor.

Doug Andrew, author of the books “Missed Fortune”, “Missed Fortune 101”, and “The Last Chance Millionaire”, is your “pilot” on this flight. I am your retirement “travel” agent Steve Minnich. Together let’s plan a safer, more comfortable retirement “flight” for our “passengers,” for you and for all your loved ones.