Just retired and worried about the market

[rrs26ja]

Hi All,


I just retired from a major corporation at 61.6 years old. I am one of the lucky ones who gets a small pension. My wife and I have done well with our 401k but now I am worried about where the market is heading. I attended a local seminar a few months ago where the concept was to move 100k per year out of my 401k for the next 10 years and purchase whole life insurance through Mass Mutual. The concept is, this the lowest income tax rate you will have and with the countries debt the tax rate has no were to go but up. Currently this insurance is paying a 7.5% dividend. Long story short in reviewing the details of their spread sheet I would have to make > 8% consistently in my investments to beat their plan. Has anyone heard of this.

 

[Ready2Go]

I wouldn't purchase Whole Life insurance if someone held a gun to my head. I don't know this particular product but look VERY closely at the numbers....especially fees.

 

[frayne]

I'll bet the seminar was sponsored by Mass Mutual and included a free meal. Read the fine print and buyer beware. Where do you think the insurance companies invest their money, North Korean bit coins or Argentina pork belly futures ?

 

[OddGuy]

Let me guess...was the seminar hosted by a representative of Mass Mutual?

 

[Chuckanut]

The next time you feel the urge to attend a seminar go to this website instead:

humbledollar.com

 

[MRG]

Don't do that!

Whole life is a bad deal for you. It's great for the agent. My DF sold the crap to others and never bought any!

One of the last guys he trained told him, 10 years ago, thanks. The guy had figured he'd make 600k in commission that year. You want to make someone else wealthy? I'd rather keep my money for us.

 

[OldShooter]

... the concept was to move 100k per year out of my 401k for the next 10 years and purchase whole life insurance through Mass Mutual. The concept is, this the lowest income tax rate you will have and with the countries debt the tax rate has no were to go but up. Currently this insurance is paying a 7.5% dividend. ...

Actually the concept was for the sales rep to make some big commissions. The effect on the customers is merely a means to that end.

... Long story short in reviewing the details of their spread sheet I would have to make > 8% consistently in my investments to beat their plan. Has anyone heard of this.

Certainly, at 61.6 YO, someone has told you that there is no free lunch. Those pitches are expertly done, highly polished, and the half-truths and lies are hard to discern. I suggest that you not spend any time trying to figure out exactly how they are trying to trick you. As others have said, just stay away.

To your general point, worry about the market, why should you be any different? All of us are worried about the future in general and the market in particular. But many of us feel comfortable and secure in being patient, long-term investors with asset allocations that suit our situations. You can do that too, but not by listening to hucksters. Try the tutorial stuff at bogleheads.org as a starting point: https://www.bogleheads.org/wiki/Getting_started Bernstein's "If You Can", though not aimed at us old folks, contains a lot of wisdom and some good reading recommendations, is only 17 pages and is a free download: If You Can and Rational Expectations

 

[GrayHare]

Many people use what's known as a "cash bucket" which essentially means keeping several years of future expenses in cash so as to avoid being forced to sell stocks during a down period. It's much cheaper insurance than life insurance.

 

[Conundrum]

danger! danger! A pure money grab. Period.

 

[marko]

My wife and I have done well with our 401k but now I am worried about where the market is heading.

If you've done well with your 401K why not stay there or via IRA? I'll assume you've been in your 401K for years and years so you should know that the market rises and falls, heads up and and heads down. You likely rode out '08 nicely, no?

If you're concerned about the market, think of some bonds or MM's to hold you until your worries subside.

I'm no expert on whole life but those here who are urge caution.

 

[The Cosmic Avenger]

I have to agree with everyone else, especially marko, who pointed out that the next recession will just be another part of the cycle. Yes, it's harder to weather a correction if you actually need to draw on those funds, but 3 years of essential expenses is pretty safe, and many members here play it more conservative and keep 5-10 years in fairly safe investments. And if you scale back to, say, a 60/40 asset allocation, you'll have plenty of money to take advantage of the bargains during the downturn! Keep rebalancing and you should be fine!

Now, if you want to generate safe income regardless of the market, there are plenty of threads here on annuities and bond ladders. At least run the numbers and see how those compare to the scheme you were pitched before you decide.

 

[OldShooter]

I have to agree with everyone else, especially marko, who pointed out that the next recession will just be another part of the cycle. Yes, it's harder to weather a correction if you actually need to draw on those funds, but 3 years of essential expenses is pretty safe, and many members here play it more conservative and keep 5-10 years in fairly safe investments. And if you scale back to, say, a 60/40 asset allocation, you'll have plenty of money to take advantage of the bargains during the downturn! Keep rebalancing and you should be fine!

Now, if you want to generate safe income regardless of the market, there are plenty of threads here on annuities and bond ladders. At least run the numbers and see how those compare to the scheme you were pitched before you decide.

+1


Except don't bother looking at the insurance scheme. You are wasting your time and, given the skill of the hucksters who peddle that stuff, you may end up confused and mislead again.

 

[joeea]

I attended a local seminar a few months ago where the concept was to move 100k per year out of my 401k for the next 10 years and purchase whole life insurance through Mass Mutual.

Ugh.

The concept is, this the lowest income tax rate you will have and with the countries debt the tax rate has no were to go but up.

I agree that taxes will go up.

But going from there to "thus you should purchase whole life insurance" is ridiculous, IMHO.

Currently this insurance is paying a 7.5% dividend.

What does "currently" mean in this context? And what will be the impact of "where the market is heading" on this dividend?

Long story short in reviewing the details of their spread sheet I would have to make > 8% consistently in my investments to beat their plan.

Are you sure about your spreadsheet?

Has anyone heard of this.

Yes. I've heard many times of salefolks pitching dubious claims regarding their insurance products so that they could make a huge commission.

Did you ask what the commissions would be on $1M? And did you ask if the commissions are taken out at the beginning of each $100k investment? I'm guessing any potential "7% dividends" are applied only to what is left over after the commission is skimmed off the top. Does your spreadsheet account for that?

 

[Texas Proud]

Throw everything that you got from that 'seminar' in the garbage... (it should be called a sales call).... get rid of any contact info you might have with the guys... heck, if you can block their calls...


It is NOT, repeat NOT good for you to do what they want... they are selling fear and charging you a high price.... and you will not be better off in say 95 out of 100 possibilities (I will give them maybe 5 where it might work, but that is being generous since this is a WAG)...

 

[ready53]

Do all of the warnings about Whole Life Policies also apply to Long Term Care Policies?

 

[Huston55]

Do all of the warnings about Whole Life Policies also apply to Long Term Care Policies?

I would not buy either so, in that sense, the ‘warnings’ apply. However, they’re two different products so, I think you need to evaluate them independently. Here’s a link to a recent LTCi thread; read this for some good discussion (take a look at post #131 if you want some of my thoughts ).

http://www.early-retirement.org/forums/f28/what-is-considered-ltc-self-insure-safe-level-86784.html

 

[braumeister]

FWIW, this appears to have been just a drive-by posting. The OP hasn't been back since.

 

[REWahoo]

fwiw, this appears to have been [-]just a drive-by posting[/-] mass mutual life insurance spam. The op hasn't been back since.

fify

 

[bw5972]

I wouldn't purchase Whole Life insurance if someone held a gun to my head. I don't know this particular product but look VERY closely at the numbers....especially fees.

+1

 

[24601NoMore]

There's a reason it's called "Whole" Life..because you're essentially throwing your money into a hole.

Whole Life is one of the very worst financial decisions you can ever make. RUN, don't walk from such thievery.

And if you're still so inclined after all the good advice here, make damn sure you UNDERSTAND how the "policy" works - because it's a very safe bet it is not "earning" 7% that it is paying you. More likely, you're getting either: a) return of your own capital spread out over some # of years or b) not "really" 7%.

FWIW if someone "guaranteed" me a 7% annual return, I'd go for it in a heart beat. But alas, no such purple unicorn truly exists.

Read and UNDERSTAND the "fine print". There is no 7% or we would all buy it.

 

[LXEX55]

Just as a quick side note, anything you hear at sponsored seminars is usually crap.

 

[youbet]

Whole Life is one of the very worst financial decisions you can ever make. RUN, don't walk from such thievery.

While I wouldn't make WL a part of my investment plan, I think describing it as "one of the very worst financial decisions you can ever make" might be a bit of an overstatement RetireSoon.......

To test this, DW and I just spent three minutes brain storming other financial decisions that might be even worse than WL and we had no trouble coming up with a stack of them.

 

[Helen]

OP, I'm glad you asked before buying. So many people don't do any research, they just listen to the sales rep.

I hope you hang around, it's a great, and very knowledgeable, group of people here!

 

[ncbill]

My bet is that this is an equity-indexed universal whole life policy.

With the projection showing a 7.5% return (might also be the cap)

Versus the guaranteed return which will be much, much lower.

All the universal life policies I've had have collapsed to the guarantee and so blew up.