What Percent of Your Income Goes to All Types of Tax?

Ttax2-595axes: How Much You Really Pay

We all hate it, but it’s a fact of life, as certain as death, as the old saying goes. There are federal income taxes, state income taxes, sales taxes, city taxes, property taxes, and even death taxes (see [insert Link to Death Tax Blog]). When you combine all the taxes, it may be surprising to learn just how much of your hard-earned income you actually get to keep—and how much is handed over to the Tax Man.

First, the federal government taxes your income, and assuming you are not self-employed, conveniently takes its share right out of your paycheck.  It takes anywhere from 10% – 39.6% of your total income, depending on your filing status, number of dependents, and total household income. The average person pays 17% of their gross income to this federal tax.

Next comes the Social Security and Medicare taxes, which are also a payroll deduction if employed.  This eats away at your income by another 7.65% for employees, or 15.3% for those who are are self-employed.

Also included as a deduction on your paycheck are state or local personal income taxes, which vary by state.  The average person pays 10.1% for state income taxes.  These three deductions take 34.75% of the average person’s income if they are employees, or 42.4% for the self-employed.  For a person earning 200,000 per year, this means bringing home $130,500 of your hard-earned money, or $115,200 if you are self-employed.

The average American employee pays

Federal Personal Income Tax of 17%

FICA of 7.65%

State Personal Income Tax of 10.1%

TOTAL TAX 34.75%

And just when you thought it was all over, your take home pay is subject to still more taxes.  Assuming you are an employee rather than self-employed, you take the $130,500 of your income that actually belongs to you and, let’s say you spend it.  Vehicles are taxed. Your meal at Panera is taxed.  Yes, even the coffee at Starbucks is taxed.  Your home? All are taxed.

Let’s take property taxes first.  If you gross $200,000 per year, you can probably afford a home valued at $442,000.  In Utah, based on the state median tax rate, you would pay $2,652 in taxes each year on this home.  So you can take another 1.3% off your original $200,000, leaving you now with $127,848 to spend.

Then comes the sales tax.  The average sales tax rate is 9.7% across all states, but the rate is highly variable depending on where you live.  Some states do not levy sales tax at all (Alaska, Delaware, New Hampshire, Montana, and Oregon), while others charge a high rate (Tennessee, Arkansas). Further complicating the figure, some items are taxed at a higher rate.  John Mikesell in The Disappearing Retail Sales Tax calculated that as of 2011, approximately 34.46% of a person’s total income will eventually be subject to sales tax.  Let’s assume this to be a fair representation.  So of your $200,000 earned, $68,920 would be subject to sales tax.  That $68,920, on average, would be taxed 9.7%, taking another $6,685 out of your pocket, and into the pocket of the Tax Man.

This leaves you with $121,163.  This is onlly 60.5% of what you earned.  So let’s summarize where your $200,000 is really going:

AverageTax rate Total Tax Remaining Income
Federal Personal Income Tax 17% $34,000 $166,000
FICA 7.65% $15,300 $150,700
State & Local Income Taxes 10.1% $20,200 $130,500
Property Tax 1.3% $2,652 $127,848
Sales Tax 9.75% on 34.46% of gross $6,685 $121,163

$78,837 taxed of $200,000 = 39.4% effective tax rate

Finally, upon your unfortunate death, there may be even more taxes such as the Death Tax.

Fortunately, there are ways to mitigate your tax burden and keep more of your hard earned dollars. This may include tax credits (hybrid cars, green home improvements), making charitable contributions and other tax-deductible actions, lowering your tax rate by earning income from stocks and real estate, shifting income to those in lower tax brackets (children), and life insurance policies.

Many people believe that they will be in a better position by making tax deferred contributions to Qualified Retirement Plans like IRA’s and 401k’s.  This may be true only if tax rates go down or if your income goes down substantially in the future. These vehicles provide only a temporary tax benefit.  If you contribute the bulk of your savings to a tax deferred vehicle and if tax rates go up in the future you may find yourself in a higher tax bracket as you distribute the funds as future income.  Those distributions could also cause other income, like Social Security, to be taxed as well.

Give us a call and we’ll help you implement a strategy that will provide permanent tax savings.

What Will Uncle Sam Take from Your Grave?

Death Taxes
The Federal Death Tax Explained

Never has a single tax been as notorious as the Death Tax, properly known as the Federal Estate Tax. The IRS defines this tax as “a tax on your right to transfer property at your death.” The controversy surrounding the Death Tax spans from those paying this tax and those fighting for it, citing that “this tax prevents an oligarchic concentration of wealth to a few families, and is the best way to encourage the wealthy to contribute to charities and foundations. They say estate tax is the only way to prevent wealthy families from passing down their wealth tax free, generation after generation.”
Regardless of the equitable or inequitable nature of the Death Tax, there are some Death Tax facts that everyone should know before they finalize any plans about what you will leave, who you will leave it to, and how you leave it to them.

What assets are included?

Most people think only about cash and property when they think about the Death Tax. But for the purposes of this tax, all assets are included in the calculation, including property and cash, as well as securities, trusts, annuities, business interests, retirement accounts, and some death benefits from insurance policies (With regard to life insurance, a life insurance policy that is payable to a living beneficiary is not included, but life insurance that is payable to the deceased person or the deceased person’s estate is included). To calculate the Death Tax, assets are assigned a fair market value instead of what was paid for the asset or what the value was when you paid for the asset.

Who pays?

The Death Tax is assessed based on the gross amount passed on, but there are a few exceptions. If the estate is left to a surviving spouse or a tax-exempt charity, the Death Tax does not apply……yet. Unless the estate is left to one of these excepted parties, your estate will be subject to the Death Tax if upon your death, the net value of your estate is more than the exempt amount.

One important thing to note is that dividing the estate between multiple parties has no effect on the amount of tax due. Whether the estate is gifted to a single individual or ten people, the tax due is calculated on the amount the decedent leaves behind, not the amount received by each inheritor.

How can you avoid it?

Unless you do some prior planning, 100% of your assets will be added together for a total net value. The estate tax amount is then calculated based on the net value of property owned by a deceased person on the date of death. There are many ways to plan ahead to prevent this massive tax for those with significantly large estates. Some of those include the annual gift allowance prior to death, or establishing trusts that remove assets from your estate, such as irrevocable life insurance trusts, dynasty trusts, qualified personal residence trusts, and grantor retained annuity trusts. Other methods may include transferring assets to an LLC or buying whole life insurance.

Not just for the rich

Although the exemption for the Death Tax seems large, many people erroneously assume that the Death Tax is only for the exceedingly wealthy. Although it’s true that only a small number of estates exceed the estate tax exemption, it is possible for some traditional middle-class individuals to be subject to this tax due to a large insurance policy, a healthy retirement account, an inheritance, significant real estate, or business interests. It has been estimated by the Tax Policy Center that 3,800 estates had to pay estate taxes in 2013.
Today’s exemption is $5.43 million, which means that the first $5.43 million of any estate is not subject to the tax. For any estate exceeding $5.43 million in value, there is a graduated scale to determine tax due, which tops out at a whopping 40% tax rate.

A farmer, for example, may have significant assets. They have significant real estate, multiple buildings, inventory, and costly equipment. They likely have a retirement account and most assuredly have a life insurance policy in place to protect loved ones. Upon death, all of these are included when calculating the appropriate Death Tax due.

What happens if an Estate is Taxable?

What happens if the estate exceeds the federal estate tax exemption for the year of the decedent’s death? Then the estate will have to file a federal estate tax return with the IRS within nine months of the decedent’s date of death. Along with this tax return, Form 706 and corresponding payment is due. An automatic extension can be applied for, but the payment itself cannot be delayed without accruing interest.
For historical changes to the federal estate tax exemption and rate from 1997 to current, refer to the following chart:

Screen Shot 2015-08-10 at 4.14.50 PM

State Death Taxes
Aside from federal estate taxes, a handful of U.S. states collect a death tax at the state level as well (currently 20 states have an additional state death tax).
In some states the tax is based on the overall value of the estate, which is referred to as an estate tax, while in other states the tax is based on who inherits the estate, which is referred to as an inheritance tax.

How do I plan for all of this?

Everyone with a sizable estate needs to plan ahead. In 2010 the estate tax exemption was on schedule to drop to $0, and again in 2013, the exemption was scheduled to drop from $5 million to $1 million, which would effect a very large number of families.
While we know what the current federal estate tax rules are and that they are supposed to be “permanent” going forward, as the saying goes, “A law is only permanent until Congress decides to change it.” So as the struggle in Washington continues to keep incoming revenues up to speed with the exorbitant amount of government spending that is occurring, Congress may very well be forced to close some of the “loopholes” that the wealthy have benefited from in the past in order to decrease the values of their estates for estate tax purposes.
Since it is very likely that some of these exemptions will be eliminated or reduced in the future, it is important to keep current on the our administration’s revenue-generating proposals and the ongoing discussions about completely overhauling the Internal Revenue Code to avoid being blind-sided by a change that will affect your income tax liability and estate planning goals.

I highly recommend a great estate attorney as well as knowledgeable financial advisors that keep current on the laws and tools to protect your family and the assets you have created during your lifetime.

Fighting Deception in Today’s Bull Market Economy

Fighting Deception in Today's Bull Market Economy
Fighting Deception in Today’s Bull Market Economy

Just like Warren Buffet says, “Be fearful when others are greedy, and greedy when others are fearful.”

This couldn’t be a truer and more relevant statement for everyone in the U.S. economy right now. Interest rates are on a steady rise and the recession seems to be getting under control, but it doesn’t mean we can trust the stability – or lack thereof.

All eyes are on the Fed as reports form the Brookings Institute conference, held earlier this month, focused entirely on the effects of quantitative easing and how it contributes to current wealth inequality.

Quantitative easing, for the FED, is unconventional monetary policy to be used only as a last resort. Typically, to maintain their mandate of maximum employment and price stability, the Fed usually focuses on lowering the federal funds rate (the rate at which banks borrow from each other) to stimulate the economy, not buy government bonds. Focusing on the federal funds rate is a policy tactic meant to ignite the economy as it lowers what banks charge consumers to borrow money.

Though quantitative easing echoed FDR’s New Deal, and other countries like Japan and parts of Africa have seen success from QE, studies show that quantitative easing really only helps more underdeveloped countries.

According to Brookings, the reason why QE didn’t help the U.S. is because the stimulation was central to assets-only. This type of stimulation only helps wealthier individuals as they are vested in the markets. Ninety-six percent of Americans make their money from labor, not the stock market. (Forbes.com)

So, though it’s a bull market, it doesn’t mean you should trust the current indicators. Many believe that we have gotten in over our heads with a debt-ridden economy that supports dishonest investing. “We live in a chaotic world with total instability and a lot of malinvesting. People don’t save, they listen to the Fed. Debt gets liquidated, and there will be an unwinding of this pyramid of debt somehow,” said Ron Paul in a CNBC interview.

For many people saving is just too difficult. Of the 96% of Americans who work in the labor force, 76% are living paycheck to paycheck. (CNN Money) Can you blame this lack of saving and wealth inequality on quantitative easing, or the overall attitude toward debt in our country?

Fighting False Indicators

At Paradigm Life, we combat market volatility in a way you wouldn’t expect. We’re wealth strategists, not financial advisors or investment bankers, so we are not concerned with market yields. Many of our clients do not invest in the stock market after working with us, instead they keep their money safe (and still growing) in a Whole Life Insurance Policy.

Life Insurance – the way we build it – is a protected asset that is absolved from market volatility. Because your policy comes with cash value, it earns a steady and consistent return. You can also borrow against your policy to access liquidity, in addition to receiving a death benefit.

It’s the living benefits that make whole life insurance a foundational asset. The rich have used whole life as wealth strategy for hundreds of years.

With the economy trending like it is, do you feel comfortable not looking into alternative money methods?

Better Than the 529 Plan

Better Than the 529 Plan
Better Than the 529 Plan

The summer season brings many things to our existence – family picnics, fireworks, BBQ’s, vacations, and college. Though college is a noble aspiration and we want our kids to attend, it is often accompanied with this sincere question: How are we going to pay for it?

According to Sallie Mae, only half of all American families are saving for college. Which means that kids are using financial aid for their entire tuition, or grandparents are stepping in to help cover the cost.

Fidelity Investments actually reported that 53% of grandparents are helping, or planning to help, their grandkids with tuition. The survey also discovered that the average assistance amount was $25,000. Grandparents today are more generous than people thought – maybe even too generous. Fidelity also found that 55% of grandparents were very worried about saving for their own retirement. (CNBC)

It’s a bit surprising that grandparents today are okay with helping their children’s kids pay for college rather than prepare for their own retirement, but at the same time, college tuition and student loan debt have reached record highs. In 2002 the average student loan debt was $21, 736, and by 2012 it rose to $27,910. Grandparents want to sacrifice for their grandkids though; the data still shows that those with college degrees earn 2x more than those without a degree.

If grandparents, or anyone for that matter, are gifting an undergraduate with money to help foot the higher education bill, they have likely saved into a 529 plan or are savvy to gift tax laws. If not, then Uncle Sam will be sure to collect his share of the college savings by up to half of the total amount saved. 529 plans and gift tax rules create excellent tax shelters while saving for college, but there is a less complicated and more beneficial way to assist with tuition.

A Banking Policy

Instead of using qualified accounts to save (like the 529 plan) or going through your accountant to supply your grandchild or child with a tuition gift, use a banking policy.

A banking policy, also known as whole life insurance, is a savings vehicle for your money that comes with no strings attached, cash value, rate of return, and a death benefit. You want to help someone you love get to college? Use the liquidity from a life insurance policy.

Accessing liquidity from a life insurance policy for anything – buying a house, funding a business, or college tuition – is one of the many reasons why whole life insurance is considered to be an “AND” asset. Once you use your cash value you don’t lose it, you still earn interest! This creates financial velocity and money maximization, which is why we at Paradigm Life refer to whole life as the “AND” asset.

Using your cash value as a financing plan is smart. The rich have been using whole life insurance as a wealth building strategy for hundreds of years. When you use your policy to ‘bank’ you are not losing any opportunity cost, but igniting two financial powers – rate of return and actuarial science.

So, if you’re a grandparent or parent looking for the less painful way to help get your kids to college, look into whole life insurance. It’s the only “AND” asset out there that can assist both yourself and your student build wealth and prepare for the future.

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Dividends Make the Difference

Dividends Make the Difference
Dividends Make the Difference

Each of us are looking for ways to increase cash flow. And probably most of us who invest, or at least want to invest, have an idea about where we want to put our money for the best yield. Certain stocks may come to mind or real estate, but have you ever considered investing in dividend paying life insurance?

Dividend paying whole life insurance is one of the few vehicles that maximizes your money, and provides your financial life with wealth building foundations.

It’s an Asset, Not an Investment

Properly built and structured Whole Life Insurance is an asset that mimics an investment. This hybrid characteristic is what makes permanent life insurance so attractive to many people. Life insurance gives policy owners a steady rate of return, can be an inflation hedge, provides a death benefit, and of course yields dividends.

These attributes aren’t the only positives about Whole Life. Whole Life has a cash value that acts as a savings account for many people, or can be used to reinvest in other performing assets.

The wealthy have used Whole Life Insurance for decades because it is more than a safe holding place for money, it’s secure and it builds wealth.

Making the Most of Dividends

Though dividends are not guaranteed, life insurance companies are among the few that have a long history of paying annual dividends to their policy holders. New York Life, for instance, paid dividends during the great depression.

Dividends can be applied to your premium payment as a way to offset your out-of-pocket cost, or it can be rolled back into your policy as a paid-up addition. A paid-up addition is an immediate way to add more cash value and death benefit to your policy.

The IRS does not consider dividends to be earned income, but a return of premium, which means that it will not be taxed. The exception, however, is that your dividend cannot exceed your premium. If it does then it is considered earned income and taxable.

Adding your dividend payout to your premium is just one way to use it, but of course, it can be used in other ways you see fit.

What Determines the Dividend?

There are three factors that determine dividends – mortality rates, corporate expenses, and investment returns. The reason why mutually owned life insurance companies have such reliable distributions year after year, is because their dividends come from multiple streams.

Because Life Insurance is looked at by individuals as just a death benefit, people tend to forget it’s an asset that comes with many living benefits. The qualities of Whole Life like, dividend distribution, market security, liquidity, and rate of return make for even more of a reason to invest in Whole Life.

For more information on how Whole Life can reshape your financial life, visit Infinite 101.

We Don’t Believe in Retirement

We Don't Believe in Retirement
We Don’t Believe in Retirement

‘Retirement’ is a buzz word in the financial industry that we don’t like to hear. That is because too often individuals we work with either believe their qualified plans are the repository of all plans, so they’re closed off to better options; or the opposite exists, where individuals realize their retirement strategy isn’t working and they are scared out of their mind.

Do you fall into one of those two categories?  We’re putting ‘retirement’ (also known as qualified plans) on the table, stripping it from misconception, and serving it up raw so you can taste it for what it is.

Kill your “Number”

Retirement plans like the 401k and IRAs mostly benefit your employer or the IRS – not you. They have too many mandates that prevent you from being in control of your savings and truly being prepared for retirement.

Because you can only contribute so much and your company will only match up to so much, individuals saving for retirement inside qualified plans focus on getting to “their number.” But getting to ‘your number’ will not give you the retirement you’re looking for. One must consider:

  • Inflation
  • Lifestyle
  • Healthcare Costs
  • Independence (financial and physical)

Many financial advisors tell people that by the time their retirement hits they won’t have kids or a house to pay for so naturally they will require less money to live on. False. A study done by the American Consumer Credit Counseling revealed that one in three households provide financial support to adult children. (Bloomberg Business) “The more boomers put out for adult kids, the less they can put aside for themselves, which is scary as they live longer and need savings to last them into their 80s and 90s,” says Pamela Villarreal of the National Center for Policy Analysis.

For some reason the current number trend for retirement is having 1 Million. One million is 10x more than the National retirement average of today.

The Federal Reserve revealed that most people ages 65-74 had a total of $148, 900 saved for retirement. Those who were 55-64 had only $103, 200 saved. (The Motley Fool) How does anyone expect to live without working on that amount over a 10-30 year period?

There is no such thing as “your number” because regardless of how much you save into a qualified plan, you’ll still be behind the curve.

Get Real With an Alternative Plan

When companies began shifting from pensions to 401k(s) in the 80’s, most didn’t realize how unfair the qualified plan was because there was no history to show for it. Now, after the 2008 meltdown when everyone’s 401(k) was lost in the crash, we finally started realizing the disadvantage we’d been leveraging all of these years.

In a way, it’s like we didn’t know any better because the qualified plan was the only retirement strategy employers offered. There is an alternative plan, however, with Whole Life Insurance.

Whole Life Insurance is more than a retirement plan, it’s a wealth building strategy that the ultra-rich have used for hundreds of years to keep their money working for them and their families.

Whole Life offers living benefits that surpass other investment strategies by a long shot, and to make things clear, Whole Life isn’t an investment, it’s an asset.

With a properly built policy your money grows with tax benefits (if not tax-free), you earn a steady rate of return, and you can privately bank. The wealthy have never stopped using Whole Life because it provides security, liquidity and acts as an inflation hedge.

To us, Whole Life is about wealth building, not just retirement, but it can successfully cover your retirement needs when you get to that point – if you’re not already there now. The word “retirement” has lost all credibility to us, because when we work with clients we focus on wealth as a whole, before, during and after “retirement.”

For more information visit Infinite 101, our FREE eLearning course on wealth.

Retire With More Money

Your Debt, the Nation’s Debt – Is there a Difference?

Your Debt, the Nation’s Debt – Is there a Difference?
Your Debt, the Nation’s Debt – Is there a Difference?

“People don’t want to hear the warning, they don’t want to hear the truth,” says Ronald Reagan’s former budget director, David Stockman.

Everyday our Nation goes deeper into debt. And to many of us, this is not a concern. Our lives keep going as we’ve always known them. Each of us may experience minor financial catastrophes, but in the grand scheme of things as we know it: if we work, we’ll make money; if we save, we’ll have security; and if we borrow money, we’ll pay it back.

The cycle seems simple, and to free market economists (and capitalists) it is simple, but unfortunately our nation has leveraged too much fake money to let the simplicity stand.

The warning signs of a major economic fallout are there, loud and clear. Right now, our National Debt is 18 trillion, which is 8x greater than our GDP. When David Stockman began his position of budget director in the Reagan Administration, the National debt was only 2x the amount of our GDP.

If your personal balance sheet revealed a debt ratio 8x greater than your income, you’d likely sweat bullets. You might react by dipping into your retirement savings, or maybe seek professional advice. But, you’d definitely realize there was a problem.

A False Sense of Security

“Wall Street has become like a Casino – they reward gambling, “says Stockman. In his book The Great Deformation, Stockman reveals how Wall Street, Washington, and the Federal Reserve have developed reckless fiscal habits that threaten the principles that America was built upon. Stockman ardently states that, “Wall Street is addicted to cheap money, and because of that they’re destroying the savers in America.”

Wall Street isn’t the only cheap money addict, Washington and the Fed are too. They just print money if they have too. “There is nothing magic about money printing and zero interest rates. It forces households and businesses to borrow more and spend less.”

Unfortunately this type of accessibility to liquid capital has created a false sense of security for every American. According to Washington, the answer to poor financial behavior is to stimulate the economy with more money. This reaction lulls everyone into falsely thinking that our economy is immutable. And it’s this very reaction that perpetuates illusory interest rates and ultimately a very, very shaky economy.

You’re in Debt $154,000

Each tax payer currently owes $154, 317 in national debt. If the economy keeps going at this pace, we are looking at an economic depression so severe, it will make the Great Depression seem like a drop in a bucket.

Hyperinflation could result making food, water and clothing quadruple in price. Imagine paying $25 for a loaf of bread, or $18 for a carton of eggs. We’ve seen hyperinflation happen in Eastern Europe within the last 20 years, what makes any of us think that we are immune to the same outcome?

For more information on how to protect yourself from this economic downturn visit Infinite 101.


Life Unexpected: Cash Flow When You Need it Most

Life Unexpected: Cash Flow When You Need It Most It can happen in the blink of an eye, no warning, no fair way to prepare. In one minute you’re immersed in your daily routine, in the next minute you’re wrapped in the chaos of loss. You never thought you’d be losing something or someone so precious in your life unexpectedly.

Unexpected loss unfortunately happens to many of us. And the emotional pain, shock, and turmoil of it all can be enough to stall life. Now, add any financial mess that may come from losing someone, and most of us are even more unprepared.

Accepting the Unexpected

The main reason why we are often not prepared for unexpected loss is because we don’t like thinking about it, let alone talking about it.

But in order to be prepared, thinking and talking about such uncomfortable life events such as death (expected or unexpected), is required in order to be properly prepared for it.

Accepting that we are all fragile and that our time on earth is borrowed, is the first step toward being prepared. When this human fragility is realized, an individual often puts guarantees in place for themselves or their family.  And there is much to prepare like, financial support for loved ones left behind, costs incurred when loss is experienced, and the delegation of assets.

What these ‘preparations’ have in common is that they all require monetary means. You will have to have the money already available in order to be able to handle the costs of the unexpected.

Whole Life: The Best Way to Be Prepared for Life’s Unexpected

Life Insurance is definitely a first when it comes to being prepared for the unexpected happenings in life. What’s important to note is that not just any life insurance policy will help with all of the unexpected. Yes, a term life insurance policy will include a death benefit, but with a whole life insurance policy you can receive a death benefit plus the policy’s cash value.

With a Whole Life policy, you get living benefits known as the cash value – cash that you can access at any time and for any reason.

Should you experience an unexpected event in life that leaves you in a financial bind, you can access the cash value of your whole life policy to cover any costs incurred.

Having Whole Life Insurance in place does not mitigate the emotional pain or fear that accompanies loss, but it will supply you with the financial means to handle all that comes with any unexpected event or accident.

So tomorrow, as you get on the road toward your day, whether or not the unexpected happens; wouldn’t it feel better knowing you had all things in place financially? If so, then consider getting a Whole Life Insurance Policy today.



Our Economy is Failing, What are You Doing about it?

Our Economy is Failing, What are You Doing about it?
Our Economy is Failing, What are You Doing about it?

The boom and bust cycle isn’t just a characteristic of a capitalistic economy, for us in the U.S. it’s a long-time pattern that jeopardizes our retirements, our spending, our enterprise, and above all our way of life. During the ‘boom’ the economy grows, and as you can imagine, during the ‘bust’ the economy falters.

From an economics standpoint, people in the 19th and early 20th centuries understood that a time of plenty often followed a time of scarcity – banks weren’t always stable, currency was inconsistent, and many commodities came as treasures back then. Because individuals prior to the Great Depression were producers, and not consumers, lack of stability was a given and Americans knew they could only rely on themselves to survive.

Fast forward to today, and the only difference between us and people of the past is the denial of our unstable economy. Though we are told by Wall Street or the government that our economy is under control and on the mend, in reality it’s more insecure right now than it’s been in history. Our economy is failing, what are you doing about it?

Symptoms Don’t Lie

Taken from his piece Symptoms Don’t Lie, financial analyst Peter Schiff points out that our economic data reports low inflation and modest growth, but the economy shows contradicting symptoms of low growth, rising prices, and diminishing purchasing power.

Tyson Foods announced last week that though their top of the line products grew in revenue by 2%, their operating margins diminished by 50%, making for a 43% decrease in profit. Based on Tyson’s report, government analysts would say they’re a prime example of low inflation and steady growth. But in the same breath, Tyson announced that conscious consumers are not buying higher priced packaged products and moving to fresh meat cuts.

This buying shift shows how consumers are sacrificing the convenience of prepared foods for cost. According to Schiff, this behavior is symptomatic of diminished purchasing power – also known as getting poorer.

In 2002 Americans spent 17% of their income on food and energy, in 2013 we spent 21%. Spending more on necessities is another indication of getting poorer, as the poorest countries in the world devote the majority of their income to surviving.

Don’t React, Respond

There is no doubt about it, trouble has been brewing in paradise for a long time. If 2008 didn’t teach us a lesson (which it didn’t), we’ll have to keep learning from more economic busts. We can react, like we did in 2008 with quantitative easing, or each of us can start taking control of our money, our savings, and our financial freedom.

For more information on how to successfully build wealth and make it last, contact a wealth strategist at Paradigm Life.

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What is Whole Life Insurance?

What is Whole Life Insurance?
What is Whole Life Insurance?

Whole Life Insurance is for when you die, right? Though Whole Life Insurance does include a death benefit, it is only one small component of a whole life policy. Really, there are two basic functions of a whole life: the insurance component and the asset component.

Both elements are important and valuable, however, because Whole Life insurance tends to be categorized with other life insurances; we wanted to give you a basic break-down of it.

The Basics of Whole Life Insurance

In laymen’s terms, it is an insurance policy that provides assistance when you die and at the same time, provides you cash to invest while you are living.

A Whole Life insurance policy is two-fold, it protects you financially in the event of an unexpected event (aka death) while also providing access to cash, like a ‘rainy day’ fund.

Component One: The Insurance Element of Whole Life

A Whole life policy is still an insurance policy for your life. It does pay a stated amount upon the death of the policy holder. There is still a designated beneficiary (or beneficiaries) to the death benefits.

Whole life insurance is for the person who wants guaranteed permanent coverage with a guaranteed premium for life.

Component Two: The Asset Element of Whole Life

A Whole Life policy is a way to accumulate wealth as the regular premiums paid go toward insurance costs, but also contribute to funds increasing in a ‘savings account’.

This ‘savings account’ holds the cash value that is part of your whole life policy. And while the cash value is ‘saved’ within the policy, it is unlike a traditional savings account.

A traditional savings account only allows you to withdraw money so many times within a given period before you are penalized. And dependent on the type of savings account, you may only be allowed to withdraw money for specific reasons.

However, the cash value of a whole life policy is available to you for anything you want or need – literally anything!

Time to Get a Policy of Your Own

Each whole life policy is tailored to the lifestyle and financial needs of each policy holder. So there are many options that are available to include with your standard whole life policy.

With any and all additions to a whole life policy, the two foundational elements always remain. You still always have the death benefit, and the cash value asset at your disposal as part of your whole life policy.

Now that you know the basics of Whole Life Insurance, it’s time you went out and got a policy of your own!

Read: The Whole Truth about Whole Life Insurance

Watch: Climbing to Financial Freedom

Listen: Leave Your Legacy