Author Topic: Financial Planner  (Read 6810 times)

Offline churnbabychurn

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Re: Financial Planner
« Reply #30 on: August 08, 2013, 03:17:40 PM »
The reasons to get the Roth IRA even though...Tax brackets may be higher in the future especially seeing the national debt and everything else that's going on, like the fact that long term care/medicaid medicare expense is skyrocketing. You may very well have income during retirement, even though you don't know for sure now. The biggest factor is how much your IRA will make... For example if you put in $100k and it grows to $1MM the Roth is clearly better as it will all be tax free. If it grows to $200k by retirement then reg IRA prob better...
-1
If you predict such a healthy return, its best to do a traditional and invest the money as opposed to having a lower basis with the Roth.

Offline Lou Bob

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Re: Financial Planner
« Reply #31 on: August 08, 2013, 03:24:21 PM »
You can also use a Whole Life insurance policy as a Roth Ira.
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Offline DMYD

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Re: Financial Planner
« Reply #32 on: August 08, 2013, 11:13:47 PM »
A regular Whole Life policy can be a little difficult if used as retirement, A Custom Whole Life would work much better for retirement, you can choose how much you want to contribute and for how many years! 

Offline Barryg

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Re: Financial Planner
« Reply #33 on: August 09, 2013, 12:38:20 AM »
-1
If you predict such a healthy return, its best to do a traditional and invest the money as opposed to having a lower basis with the Roth.

I don't predict a healthy return, but I'm not the one deciding between reg and Roth IRA... It would be up to them to predict...
Using the originally discussed 24% tax bracket and my $100k example... If (the Roth of) $100k would grow to $1M then (the reg IRA) $133.33334k would grow to $1.33333334M. With the unknown future tax bracket, I'd pick $1M tax free over $1and 1/3 M taxed... Any advantages that you can think of in picking traditional, or is my math flawed??

Offline Barryg

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Re: Financial Planner
« Reply #34 on: August 09, 2013, 12:42:32 AM »
A regular Whole Life policy can be a little difficult if used as retirement, A Custom Whole Life would work much better for retirement, you can choose how much you want to contribute and for how many years!
AFAIK Custom WL is a NY life product, unless you're referring to something else... Why would a reg WL be difficult to use as retirement? I'm pretty certain that if someone wanted to, for example, put exactly $5000/year for 35 years, into a reg WL, they may come out with a random amount of face value in ins. plan, but how difficult could this possibly be??

Offline churnbabychurn

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Re: Financial Planner
« Reply #35 on: August 09, 2013, 07:42:23 AM »
I don't predict a healthy return, but I'm not the one deciding between reg and Roth IRA... It would be up to them to predict...
Using the originally discussed 24% tax bracket and my $100k example... If (the Roth of) $100k would grow to $1M then (the reg IRA) $133.33334k would grow to $1.33333334M. With the unknown future tax bracket, I'd pick $1M tax free over $1and 1/3 M taxed... Any advantages that you can think of in picking traditional, or is my math flawed??
Its the math! :)
FV of 100k at 10% over 20 years is 672,500 FV of 124k is 833.900
Factor in a reasonable future tax bracket and your still ahead with the traditional IRA.

Offline gpapadop

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Re: Financial Planner
« Reply #36 on: August 09, 2013, 10:42:39 AM »
>>>>>>>>>>>>>I find it interesting that you have not come to utilize either an annuity tradtional/immediate or an insurance policy to help anyone.

Fixed annuities have their place in the marketplace.
Variable annuities and insurance policies marketed as investments are a giant load of crap for the people who buy them (and super lucrative for the ones who sell them).

« Last Edit: August 09, 2013, 10:46:17 AM by gpapadop »

Online skyguy918

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Re: Financial Planner
« Reply #37 on: August 09, 2013, 11:24:42 AM »
>>>>>>>>>>>>>I find it interesting that you have not come to utilize either an annuity tradtional/immediate or an insurance policy to help anyone.

Fixed annuities have their place in the marketplace.
Variable annuities and insurance policies marketed as investments are a giant load of crap for the people who buy them (and super lucrative for the ones who sell them).

By the ones who sell them are you referring to the agent/broker or to the insurance company? The fact is that for most companies that offer multiple types of permanent life insurance, the highest commissions will be on whole life, not on VUL. On the annuities side the highest will be on income annuities, not on FDA's and VDA's.

Offline Barryg

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Re: Financial Planner
« Reply #38 on: August 09, 2013, 11:35:21 AM »
Its the math! :)
FV of 100k at 10% over 20 years is 672,500 FV of 124k is 833.900
Factor in a reasonable future tax bracket and your still ahead with the traditional IRA.
First of all don't short change the Traditional, we were assuming a 25% tax bracket which would compare investing $100k Roth vs $133.33334k traditional.
Second of all you took an unreasonably high assumption of 8% that I threw out there, bashed it and took it to 10%, I would have lowered it to 6 or 7 and instead increase the amount of time until retirement to 35 or 40 years...
But why redo the numbers? I already had the $100k Roth investment at $1M and the Traditional at $1.33M. I'd guess you'd pick the traditional at $1 and 1/3 Mil taxes, I'd pick the Roth. One can also split if unsure.
Just thinking out loud here, if someone was 65 and was presented with a safe/lucrative investment and wanted to cash out let's say $500k from retirement fund in one tax year, it prob would suck if he picked the traditional IRA, no?

Offline 12HRS

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Re: Financial Planner
« Reply #39 on: August 09, 2013, 11:52:20 AM »
Why would the standard assumption be looking at it from when you are 25 years old that at 65 you would want to take out 500k in one year?

Offline Barryg

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Re: Financial Planner
« Reply #40 on: August 09, 2013, 12:18:10 PM »
I was looking at $1M not taxable (Roth) vs. $1.3333M taxable (traditional) with a big ? as to what the tax rate would be at that time. I was just trying to add a pro or con as it would seem that neither would have a large advantage.
The way most people look at it is what if I took out (for example) $50k a year to supplement retirement income? What tax bracket will I be in (at age 65)?
However, I think it would be very relevant and wise not to be STUCK at not being able to access my own money if there is a lucrative investment. Ldaati the HaChacham Einav Brosho approach would be to be liquid and have easy access to my money if needed...

Offline yos9694

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Re: Financial Planner
« Reply #41 on: August 09, 2013, 12:58:19 PM »
AFAIK Custom WL is a NY life product, unless you're referring to something else... Why would a reg WL be difficult to use as retirement? I'm pretty certain that if someone wanted to, for example, put exactly $5000/year for 35 years, into a reg WL, they may come out with a random amount of face value in ins. plan, but how difficult could this possibly be??

I think he means that a Limited Pay WL product is easier to deal with for this purpose than a Lifetime Pay, regardless of the company of issue. If you have premiums due during your draw-down phase, it can be messy and/or hard to understand.

Offline yos9694

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Re: Financial Planner
« Reply #42 on: August 09, 2013, 01:03:54 PM »
>>>>>>>>>>>>>I find it interesting that you have not come to utilize either an annuity tradtional/immediate or an insurance policy to help anyone.

Fixed annuities have their place in the marketplace.
Variable annuities and insurance policies marketed as investments are a giant load of crap for the people who buy them (and super lucrative for the ones who sell them).

That may be true for clients of modest means or the slightly affluent, who are able to satisfy their tax advantaged savings goals with 401k, IRA, 529, etc. When you start to work with the extremely affluent or wealthier, maxing out the usual tax advantaged savings vehicles doesn't even come close to meeting their needs, and VA/LI becomes very logical.

Offline Dan

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Re: Financial Planner
« Reply #43 on: August 09, 2013, 04:48:16 PM »
That may be true for clients of modest means or the slightly affluent, who are able to satisfy their tax advantaged savings goals with 401k, IRA, 529, etc. When you start to work with the extremely affluent or wealthier, maxing out the usual tax advantaged savings vehicles doesn't even come close to meeting their needs, and VA/LI becomes very logical.
Logical for the broker, no doubt ;)
I've heard the commissions paid are just insane.
Save your time, I don't answer PM. Post it in the forum and a dedicated DDF'er will get back to you as soon as possible.

Offline LAXtraveler

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Re: Financial Planner
« Reply #44 on: August 09, 2013, 04:54:42 PM »
That may be true for clients of modest means or the slightly affluent, who are able to satisfy their tax advantaged savings goals with 401k, IRA, 529, etc. When you start to work with the extremely affluent or wealthier, maxing out the usual tax advantaged savings vehicles doesn't even come close to meeting their needs, and VA/LI becomes very logical.

I think your sentiments are correct here.  LI can have its place among other tax/estate planning mechanisms if the person/family is in need of such an investment vehicle. I think you will find many estate planning attorneys who agree with this too.