The Single Most Important Thing to Do to Retire Easier

The surest way to gain weight is to eat more. The proven way to stay in shape is to exercise regularly. And as simple as these facts are to grasp there are still many overweight and physically unfit Americans today.


That is because Americans tend to want more.  And wanting more isn’t essentially a bad thing.  But it can become bad when we expect someone or something to bail us out from our own lack of planning and poor decisions. In fact, that kind of thinking can make you susceptible to the Retirement Curveball that many have been struck with.


Robert Shiller, Yale Professor, Nobel Prize winning economist and co-founder of the Case-Shiller Index recently commented on this Americanism while a guest on Squawk Box CNBC[i]


“Retirement will be difficult if you don’t save more, I don’t think people have reached that state of mind yet.”[ii]


That millions of people either are not planning or continue to make poor decisions in their planning is going to make it very difficult for them in retirement.


At an investment summit in June 2015, Steve Forbes addressed this issue when he explained why Americans are facing a retirement crisis.  The problem Forbes stated, “Is that millions of Americans are losing up to 70% of their nest egg to mutual fund fees.”[iii]


And Forbes is not alone in his analysis.  Jack Bogle, founder of the trusted Vanguard Group has been asking for several years:


“Do you really want to invest in a system where you put up 100% of the capital, you take 100% of the risk, and you get 30% of the return? One becomes thoroughly disgusted when one looks at the industry and what it’s charging and what it’s giving back. I’d do better to put my money in a mattress, it would seem, given some of these fees that people are paying.”[iv]


The good news is, you don’t need those fund managers to build a safe, secure savings for your retirement.  All you need is some basic knowledge that used to be as common as, “If you want to lose weight, don’t eat as much,” and “Exercise regularly if you want to keep in shape.”  And that is “save more…in the right place.”


One solution to saving more is by eliminating fees and it involves participating whole life insurance with a paid up additions rider attached for fast and secure growth of cash value.  If the policy is designed correctly with a mutual insurance company this in itself can be a huge benefit.


It is interesting to note, that up until the 1980’s Life Insurance was the bedrock of American savings.  In fact Andrew Carnegie recognized it as one of the 6 pillars of what he defined as the “spirit of Americanism” in 1908.


“Number Four is our life insurance system, serving, as it does, as the people’s greatest national institution of individual savings, and providing our economic system with a form of flexibility that would not be available through the Banking System alone.  No other American Institution provides the people with a source of savings that gives the individual man protection for his family and at the same time releases his mind from worry in connection with the possibility of approaching old age and its economic uncertainties. The institution of Life Insurance is definitely a part of the fundamentals of America.” [v]

Today it is possible to create a policy that provides a nice death benefit AND very good guaranteed cash values (even in the early years) that still conforms to the Modified Endowment Contract guidelines of 1988 so you get the tax benefits.[vi]


The importance of the mutual insurance company is that mutual allows policy owners to participate in profits of the company instead of stockholders and/or fund managers.  Insurance companies do hire people to manage their financial portfolios, but their salaries are very reasonable compared to the salaries paid to mainstream mutual fund managers which destroy 60% to 80% of your profits.[vii]


This means that when you save more, like Shiller encourages us all to do, you won’t be giving those fund managers a big pay raise at your expense.


The effective Internal Rate of Return on Premiums versus Cash Value for a typical whole life policy can be as high as 3-4% over 30 years.  In comparing this to a mutual fund investment one must consider the after-tax and after-fees return and the purchase of equivalent term insurance.

Everything considered Whole Life Insurance offers a very attractive foundation of guarantees while minimizing the fees all in one package.  And unlike the limitations on a Roth IRA, where there are similar tax benefits, there’s nothing that keeps you from taking a policy loan to make other investments as long as those investments promise a return that justifies the policy loan interest.


At the end of the day even if you don’t take any outside investment options you have the life insurance guarantees and haven’t been penalized for saving.


Americans today need to seriously consider Whole Life Insurance in their saving plans just as their great-grandparents did in Andrew Carnegie’s day.


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About the author: Tomas McFie is president of Life Benefits ( and author of multiple books including Retirement Curveball scheduled for release in September 2015.




ii  Ibid


iv  Ibid

v  Napoleon Hill, Think Your Way To Wealth, pg. 18



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