Originally published on Evidence Based Advisor Marketing
I’m on a mission and I need your help.
America’s middle class is in crisis. They’re facing a retirement tsunami. Together, we can make a real impact.
I partnered with Patrick Thornton, a Fellow of the Society of Actuaries and a Member of the American Academy of Actuaries. I challenged him to come up with a plan uniquely suited to middle-class Americans (defined as those earning between $50,000 and $100,000 a year).
I wanted a plan that put them on a glide path, with limited exposure to the stock market.
He delivered a really creative, unique and game-changing plan. We call it “Middle America’s Plan.” The acronym is MAP. You can read all about it on our recently launched webpage.
A critical need
Members of the middle class haven’t saved for retirement. Pre-retirees have an average of only $104,000 in savings, which would yield a monthly income of $310.
A Wells Fargo survey found that half of the members of the middle class in their 50s said they will need to work to age 80.
This demographic lacks investment experience and expertise. They misuse their retirement accounts. They have little appetite for risk and don’t trust the stock market.
To make an impact, we had to come up with an entirely different approach to their retirement planning. And we need your help to implement it.
You can read details of MAP here. Here’s a summary:
- Establish realistic savings goals for the middle class. The after-tax savings rate using MAP for those under 45 ranges from 9-18 percent. It only increases at age 45 and above when income is higher.
- Contribute 4 percent of income into a 401(k) or similar retirement plan.
- Use a very specialized whole life insurance product (“Limited-Pay Whole Life”) to bridge the gap between retirement and age 70, thereby permitting the middle class to maximize Social Security benefits.
- Use a little known and underutilized type of annuity, called a “Deferred Income Annuity” to add a guaranteed, lifetime stream of income post-retirement.
MAP isn’t right for everyone. There are a growing number of financial advisors willing to serve this demographic, which is estimated to include 40 million people. If those advisors believe their clients can deal with market volatility and have the discipline to “stay the course” when the market corrects, a portfolio of low-cost index funds will likely outperform the cash value returns associated with the insurance and annuity payments recommended in MAP.
Our core belief is that those who adopt MAP, and stick with it, will be more secure in retirement than those who don’t.
While some members of MAP can implement it on their own, most will need the assistance of financial advisors and insurance professionals. The insurance products we recommend are available from a number of highly rated insurance companies.
That’s where you come in.
We want to have a list of advisors willing to help members of our demographic listed on our webpage. There is no obligation to impose MAP on anyone. We’re fine with having you assess the needs of each client and give them advice that is most suitable for them, but we want you to be aware of MAP.
We also would be grateful if you would make the availability of MAP known to prospects you might not otherwise serve, and to publicize it on your social media.
Can you charge for MAP?
Insurance companies will pay commissions when the products we recommend are sold. The amount of those commissions varies by company. You may also be able to charge a modest financial planning fee.
Fee-only RIAs will have to refer the insurance issues to an insurance professional. Doing so may have a collateral benefit of mutual referrals.
But the real reward for becoming a MAP resource is helping your fellow Americans, who face a dismal future without you.
Resource of the week
Please spend some time reviewing the information on our MAP website.