E105: How to Avoid the Two Biggest Retirement Planning Failures

In this episode, we discuss the two most significant flaws in planning for retirement. We’ll also reveal why we believe the conventional concept of retirement is actually detrimental to your goal of becoming financially successful.

Avoiding Retirement Planning Failures Topics:

  • What is the “Retirement Trap” described by Nelson Nash
  • Planning around a future with increased government taxation, spending, and deficits
  • Why Social Security is a ticking time bomb
  • Why the wealthy do not invest in 401k’s
  • How to change how you think about retirement in a meaningful way
  • Rabbi Lapin’s wise words on retirement

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Podcast transcript for episode 105: Avoid Two Biggest Retirement Planning 

Nate: In this episode, we discuss the two biggest flaws in planning for retirement, and why we believe the conventional concept of retirement is actually detrimental to your goal of becoming financially successful. She’s Holly, and she helps people find financial freedom.

Holly: He’s Nate. He makes sense out of money. This is Dollars and Nonsense. If you follow the herd, you will be slaughtered.

Nate: All right. Well, great to be back, Holly, once again. And I just want to thank everyone who is here listening. And as always, it’s just a great help getting more exposure to the podcast. If you would like it on iTunes or wherever it is that you’re listening to us, or write a review, all those things just really help. And we’re here for another episode, where we’re going to try to kick back at some of the most conventional ways of thinking. In fact, I don’t know if, financially, if anything gets more conventional than retirement planning here in America. It’s just what you do. And we’re going to poke some holes in it, because I think that the way we are programmed to think about retirement, from A to Z, is probably flawed, borderline dangerous. Would you agree with that?

Holly: I 100% agree, Nate. I think that we have given over a lot of our freedoms and our philosophies and thought, just by following the herd, doing what everybody else is doing when it comes to a retirement program.

Nate: Yeah, I think you’re absolutely right. For those of you who have listened to us for a while, you know that we are big fans of Nelson Nash’s Infinite Banking Concept, and detailed in the book Becoming Your Own Banker. So if you have not read his book, it’s called Becoming Your Own Banker: the Infinite Banking Concept. He has a section of his book called the retirement trap, and we’re going to glean some ideas for this podcast from this page in the book, page 66.

One of the issues at hand that, Holly, I think has become more clear as a possibility here in COVID-19, we just mounted the biggest deficit. I want to say ever. Everyone keeps saying since World War II, maybe we had a higher deficit in World War two. I need to go look that up. I didn’t do that for the podcast, but we are spending money like crazy. The left’s agenda seems like it’s going to be very expensive. So we’ll see how that pans out, depending on who gets elected, but doesn’t even matter now, just over time.

And then also, what we’ve seen the government do when they declare an emergency, whether you believe it’s a good idea or not, I think we should all be a little bit alarmed when the government tries to encroach further into our liberty. All of these things are pointing to me to be concerned about retirement, especially as what happens when fiscally we are in desperate need of money, and another emergency is declared. Where are they going to go to get some money? That’s my question.

Holly: Not just where are they going to go. They’re going to go where the money is currently, that they control. That’s the bottom line. What do they control and they have the largest access to right now is our retirement programs. They are controlled by the government. Nelson even wrote, the most dangerous thing you can do with money is put it into government sponsored schemes. He didn’t even call it a retirement program. He just flat out called it a scheme, didn’t mince words at all. And I think you’re absolutely right, that this was written so much earlier than where we are today. But I think that he predicted what’s happening right now.

Nate: He’s like a prophet in this. Back in 1976, he says he penned the words on his birthday that said, “Social security will fall, as have all socialists programs since time began. And before it falls, they will attempt to prop it up. And the source of funds they will use is the reserves of private pension plans and other government sanctioned schemes.” So in 1976, when he penned those words, there was no real 401k or IRA. He could see that that was where it was going to go.

I think now more than ever, we’re seeing the wisdom in these words, that the government, in times of emergency, when social security is going to run out of money and we know it is, how are they going to get you to prop it up? How are they going to continue to pay the benefits? The money is not there. Where are they going to go? They can either tax us more heavily, or they can start confiscating money from schemes they invented. In reality, a 401k and an IRA, it exists because the IRS code says it exists. It exists because the government created language in their code to allow for it. When they create a solution to a problem that they also created, you got to start trying to figure out if you’re being manipulated a little bit.

Holly: If it’s so good for you and I, why isn’t it good enough for them?

Nate: Why isn’t it good enough for who?

Holly: [crosstalk 00:04:52] The government, our wealthy, our congressmen, our senators. Most of them don’t have 401ks, or the wealthy don’t qualify for 401ks. It’s not for the wealthy, it’s for you and I. And it’s for you and I, so somebody else can control it.

Nate: Yeah, exactly right. So we’ve already mentioned one, but we’re going to talk about two main areas that Nelson also mentioned about retirement. I guess I want to mention too, that we also help people on their journey to retire. I thought it was important to go actually share our philosophy on this matter.

And so we’re going to talk about first, as we’re already started, that anytime the government comes in to try to solve a problem, it normally goes awry and it fails. So that’s the first thing we’re going to talk about. The second thing is the idea of retirement itself, I believe is dangerous, and is actually hurting people more than it’s helping people. I do think it’s dangerous to have your money in a government sponsored scheme because at any moment in time, they can change the rules on the 401k, because they created the 401k. They’re your partner in the 401k. And they get to decide the rules.

And so one stroke of a pen, the 401k could be confiscated, or at least they could force you to pay taxes in a different way, at a different level, different rates. It’s just crazy what they can do. When they create the program, they can change the program. And so you’re in business with the government. Who here really would want to partner with the government? As we’ve always said with the 401k, there’s an amount that you owe on that 401k, that’s going to come due when you do decide to retire. You just don’t have any idea what you’re going to owe on it because you don’t write the rules. You don’t write the tax laws. The government is totally in control of how much of that 401k is yours and how much is theirs.

And what we’ve seen in COVID-19, it just seems like we’re only a few emergencies away from them getting very desperate for money. And what are they going to go? I’m telling you, they’re not going to go raid life insurance policies. They can’t.

Holly: They can’t.

Nate: They’re not going to raise your home equity. They can’t. What are they going to raid? They’re going to raid the retirement programs that they created. I don’t know if that’s going to happen sooner or later, but I think Nelson’s right. Every socialist program that’s built is destined to implode at some point. Hopefully, it’s not in your lifetime, you listener, but we don’t know.

Holly: It’s not just that they fail. It’s the myth and the belief in the government scheme, and we have believed the myth that our money is secure and safe, and we’re going to have access to it in the future. And it’s like a security blanket that doesn’t really exist. We’ve seen, even in COVID, well, you can take up to this much money without paying the 10% penalty.

Nate: Just like that [crosstalk 00:07:38] in an emergency, real quick. Boom. Now that one helped us. I’m happy for that one, [crosstalk 00:07:43] but it could just as easily been on the other side of the pendulum, where they could have really quick in an emergency written a rule that actually said, we are going to double tax the distributions. If you can’t see how incredibly obvious it is that the government is in total control of how much is yours and how much is theirs.

Holly: There wasn’t a lot of rules and regulations around it, and then it went into play. And so the reality is, you have to start realizing you have no control of that program or that money. It literally doesn’t belong to you. I think that people are going to go and retire and open up their money, and there’s going to be, I say sticky notes, that say, “I owe you.” The government owes you. But I think the government’s going to tell you, “We don’t owe you anything. We just took the money in advance to pay the taxes on that.” And you’re going to have people that have nothing.

Nate: I don’t want to get too far into politics, but I think it’s just fair to say that the wealthier you are, the more likely this type of thing would happen to you.

Holly: I agree.

Nate: The higher your income, the higher balances you actually build in these programs, it seems pretty obvious that it’s way more likely that they’re going to come after the wealthier people than they are over the poor and the middle-class. So I’m going to saying that I’m a little hesitant to put the vast majority of my money in anything that government is in complete control over, especially if you’re wealthy.

So that’s one of the reasons why, as you listen to this podcast, we believe that there’s other methods that can actually achieve retirement. It’s not only better, but it’s also safer. And in many ways, you should build wealth outside of the government reach, not needing the government system that they’ve created, that I think is probably the most easiest way for them to access your wealth and rob you of it.

Holly: You have to think outside of that box, and you’ve got to start realizing how many hands are in your retirement program or in your money. You really want to create a private contract between you and someone else that the government has no ability to touch, where your money is your money, where you do have a say in it, where you don’t lose control of it. Because as much as you feel like you have control of your 401k, you don’t. You have [crosstalk 00:09:56].

Nate: That’s why we love taking policy loans as income. They’re not even reported anywhere. You could have a million dollars of cash value, take out a $300,000 policy loan, and it is an undocumented transaction. You take $300,000 out of a 401k, and suddenly you have $300,000 of income on your tax return. Automatically, the government’s going to know about it, and whatever the rules are the day that you do that, that’s what you’re going to get hit with. So dangerous, dangerous, dangerous in my mind.

Holly: And it can change overnight. Remember it can change with the stroke of a pen. That literally is how easy it is for them to change that program.

Nate: Exactly.

Holly: I don’t know why I’m calling it program. I should be saying the scheme.

Nate: I like that, scheme.

Holly: [crosstalk 00:10:33] every single one of these are schemes by our government to make us dependent on them and for you guys to lose control of your money.

Nate: They tout them as this tax savings program type of thing, or they’re giving you some benefit to avoid taxation. And as Nelson says, what if they just reduce taxes all around? They created the problem, onerous taxation, that they’re then trying to give you a little bit of a relief from, in the program they create. Just ridiculous.

But for the sake of time, we should probably move on to our next point. First off, the idea of… usually, when we talk about programs, the conventional way to build retirement, we think it’s dangerous. You’re now putting yourself in a position to be burned by whoever’s in office at the time you decided to retire. But this side of things is actually, we’re going to poke at the idea of retirement itself.

Announcer: Are you still stuck in insecurity and uncertainty? Do you want to feel like a financial genius and confident about your future? Holly and Nate have prepared something exclusively for Dollars and Nonsense listeners. It’s called the Secret Banking masterclass. You can gain free access to this course by visiting livingwealth.com/secretbanking. That’s secretbanking, all one word.

The course will share with you how the conventional system stacks the deck against you, and exactly how to break free from their system. We believe in challenging the status quo. We believe in defying conventional wealth tools while maintaining traditional values. After all, most of those conventional tools only ever seem to make someone else on the inner circle rich. Visit livingwealth.com/secretbanking. That’s secretbanking, all one word. Ease your worry, and start your journey towards security today. Visit livingwealth.com/secretbanking. Now back to the great episode with Nate and Holly.

Nate: I don’t think that there’s one financial concept or idea that has brought more fear and anxiety and concern than the idea of retirement. I think it’s hurt more people than it’s helped. I know that sounds a little bit odd because if you ask anybody their ultimate financial goal in life tends to be to be able to retire someday. And I’m just saying, man, from what I’ve seen, it does more damage than good as a steward of money. And we’ve had different people, like Rabbi Daniel Lapin on this podcast. He made the 10 commandments of money, and one of them is never retire, that the idea of retirement is flawed, and it’s dangerous, and it hurts more than it helps. So we’re going to expound on that just a little bit here.

Holly: The reality is retirement and the idea of it is a socialist idea, but the idea was to get rid of the older generation, in order to make room for jobs and stuff for younger people. But the reality is that fear and that anxiety that comes with retirement, it’s the fear that they are going to outlive their money because they know, in reality right now, there is no amount of money they could have saved that was enough.

Nate: Exactly right. I think it’s just fear on every corner. So you are right, though. The idea of retirement itself is a socialist idea, and Nelson Nash talks about that. It seems that at some point in your life, you’re probably going to have to slow down a bit. You’re trying to figure out different avenues to take care of yourself in your old age, whenever you can’t work. And at some point, our production level’s probably going to decrease. I think that’s fair.

But the idea of retiring at age 65… By the way, age 65 in the early 1900s, that was when the age of retirement was set. And the average life expectancy wasn’t even 65 for a male. So the average person didn’t even make it to retirement. That’s part of the reason that it’s flawed now. But you’re right. It’s a socialist idea that says there’s just not enough jobs to go around, so we are going to force old people to leave work.

I don’t know if people understand this, Holly, but for years, you were required to leave at age 65. You had to leave because we needed to make sure there was jobs for the next generation, which is Socialism 101 right there, government program trying to manipulate the market. It’s going to fail because it’s based on a faulty premise. And as Nelson Nash brings up, you can’t read the Bible and gain a retirement concept from the Word of God. You can’t do it. So it’s a man-made concept. And a man-made concept normally hurts people. It doesn’t really help people. So, it’s not like Moses decided, I’ve done enough. These people respect me. I’m just going to stop doing stuff. I’m going to sit around.

And I don’t want to say that to everyone’s idea of retirement. It’s not. But as Rabbi Lapin talks about, there’s something in the human nature that we are here to produce value, to help one another. And then we remuneration each other with money, with income, for helping. So that’s just the way that God designed this world, to make us dependent on each other, to achieve certain things, and that there would be an exchange of money for the value that we create. And as soon as you decide to retire, and if you’re someone who says, “I want to retire because I’m just tired of working,” you might have been deceived by this idea that work is something to disdain, instead of trying to figure out a way to enjoy the value that you’re giving,

Holly: Really what it relays is that you are of no value to society, that you are not producing anything of value for society today. And I think that that’s why you also see a lot of people, once they retire, you see a lot of deaths, too, because [crosstalk 00:16:20]

Nate: Pretty soon afterwards. Yeah. A lot of studies that show you’re not as healthy as those who continue to work.

Holly: I think it’s Rabbi Lapin that said when you’re working, it’s production. When you retire, you’ve moved to consumption. That is just thought provoking. I know that there are a lot of people that retire, and they are still helpful because maybe they’re taking care of grandchildren or helping out or doing something with volunteering or things like that. But there’s a vast majority too that actually retire and end up having to go back to work because they have ran out of money, or they’re running out of money. The average lifetime right now for a male is 88 years of age. Your money, minimum, has got to last you another 22 years. 23 [crosstalk 00:17:04] that’s a long time for this… put that in… If you retire at 65 and you think, I’m going to be okay. Think about the fact of 22, 23 years, as a male, that money has to last you. If you’re a female, hey, I got even worse news for you because your average age right now is 90. So you’re talking about 25 plus years.

Nate: You’re exactly right. So here’s one of the biggest issues that we’ve seen. The fear and anxiety and stress that retirement can bring, I think could be relieved if we just changed our concept of it. It is wise to live on less than you make. The Bible talks about money a lot, and there’s wisdom in how you deal with your money. And there may be a time when you should prepare for the fact that you might not be able to work for forever.

But the idea of retirement itself, the reason it brings fear is because of this. As you’re working, you’re counting down the years, counting down the days to when you can finally retire and be rid of this stupid job. But deep down, nagging you, is am I saving enough? Am I putting enough towards my retirement? Everything is painted in this light of, is this helping me achieve my goal of retiring one day?

And so you’re stressed out. You’re worried you won’t actually save enough to make it. And then when you finally decide to retire, you’re just sitting here stressed out, trying to figure out if this money that you built is actually enough to last .ages are going up. The idea of retiring at 65, maybe it had made some sense when the average life expectancy was 61. Well, retiring at age 65, when a 65-year-old will now probably live well into their 80s, maybe even 90s, there’s so many variables involved, that all we’re here to say is that the idea of retirement itself is can be dangerous. It can be nerve wracking.

If instead, you change your mentality and say I’m going to produce value and create value with my time, with my energy, you’ll see your numbers get bigger for what you control and what you own. Being 70 and working and doing something you love, finding joy in what you do. The culture says you need to go do what you love. And that’s great. Go for it, but it’s actually easier and probably more sustainable to change your own self and decide that I’m going to start enjoying what I do, finding joy in producing value.

And if you can’t find a way to do that, then I do think it’s time to find a different career or do something else because it’s just not worth slaving away for a paycheck for 40 years, hating your job, desperate to get out, so you can finally leave the workforce and think that that’s suddenly going to be a joy-filled experience. When in reality, you’ll probably just be stressed out, just like you were when you had a job.

Holly: You guys have to find something you’re passionate about and you love to do. And that passion and that joy that you enjoy and that you love to do doesn’t feel like work anymore because you’re being an active contributing member to society, and you’re doing something that you love and you’re passionate about. But on the same hand, we also have to do that, and we have to plan ahead, like Nate has said, and build our wealth today for in the future. Because we probably will leave this workforce at some point in time, and you want to have planned ahead for that. But on the same hand, you don’t want to spend half of your lifetime, possibly, or longer, in a job or a career that you literally are miserable in.

Nate: The other issue with retirement, the reason why you don’t see this type of concept in scripture, is because one of our goals is to use our resources to consume for our own good. I’m not speaking in judgment. I’m just saying that I think that it might be hurting more people than it’s helping.

But anyway, so the idea of retirement, just imagine if your parents decided not to retire. And instead of all the money that was spent supporting their lifestyle, what if that never had to be spent, and it was able to continue to accumulate and grow and then pass down to your generation? And you did the same thing and passed down to the next generation. I just think it’s a matter of a couple of generations of family members who got rid of the idea of retirement. The future of their family line could be dramatically changed, and people wouldn’t be going broke to broke to broke in the family line, just with nothing to pass down.

So I think there’s an importance to being wise with money, but the idea of retirement itself has many flaws, has many dangers, let alone the tools that are being touted as the best, I don’t think are. You, as a listener, to just come to grips with what you really want and see if there’s a flaw in your own philosophy on work and choose to find joy in your work. Maybe your fears of retirement would actually go away too, whether you’ll have enough, will it last. Maybe you can actually find enjoyment in working and serving, the way that I think it was supposed to be. Anything before we wrap up, Holly?Holly: I think we just need to remember, exactly what Nate and I are telling you, why are you doing what you’re doing? Really why are you putting the money where you’re putting it? And when do you want to retire? And why would you want to retire? Because somebody else told you to do it? And if you really are miserable in your job, get out. You deserve to have joy and fulfillment. And I say that because life’s too short just to be miserable every day, in my viewpoint.

Nate: Exactly right. It is too short. Your ability to retire should not define whether you were successful in this life or not.

One last thing, as we just mentioned, if you don’t actually want your money in retirement programs, there’s a window here, due to the Cares Act in 2020, that maybe allows you to get it out without a penalty. But with that being said, this is Dollars and Nonsense. If you follow the herd, you will get slaughtered.

Holly: For free transcripts and resources. Please visit livingwealth.com/e105.

Announcer: Dollars and Nonsense podcast listeners, one more thing before you go. Ease your worry and start your journey towards security today. Visit livingwealth.com/secretbanking. You’ll gain instant free access to the special one hour course Holly and Nate made for you. Again, that’s livingwealth.com/secretbanking.