“Income for Life” Vs. The Perpetual Wealth Code™

Income for Life.  What a catchy marketing phrase.  But how does it compare with the Perpetual Wealth Code™ when it comes to safety, security and stability.

Here are some things to differentiate when it comes to contemplating an Income for Life.

1. What will your income be annually with an Income for Life?
2. Will your income be fixed, adjusted, passive or a combined Income for Life?
3. Will planning to be in a lower tax bracket destroy your Income for Life?
4. How can your life expectancy drastically alter your Income for Life?

Not knowing or being able to fully foresee any of these influences is why we use the Perpetual Wealth Code™ instead of trying to discover what should be your Income for Life.  The Perpetual Wealth Code™ is based on a “Free Cash Flow” model rather than an average rate of return model.  That is because the return of your money is more important than the return you earn on your money. In regards to retirement “Free Cash Flow” allows you to keep more of what you make (including your Social Security Benefits income) rather than always deferring taxes and then facing higher taxation in later years because of your deferments.

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At McFie Insurancewe believe that the traditional focus of “rate of return on savings” model is crippling Americans financially.

And the reason is this.  Most “Americans save for 40 years of their life and earn a zero percent rate of return.” [i]  And this hard fact prevents most Americans from ever fully benefiting from their savings in retirement even though they have saved hard throughout their working years.

According to a 2015 Government Accountability Office study most Americans don’t have a retirement nest egg.  And worse yet, Americans age 55-64 average only $104,000 in savings. Here’s the problem.  By focusing on saving enough money so you can have an Income for Life many things are ignored.  Here are just a few:

1. What cost $20 forty years ago, now costs around $120.
2. Anyone who purchases anything; food, clothing, utilities, services, travel, etc., ALWAYS pays taxes.  And taxes have not gone down since 1913 even though tax rates have fluctuated up and down over the years.
3. Life expectancy. Your life expectancy is a guess unless you plan on committing suicide at a specific time in the future.  And NOBODY knows how much money will be enough for you to save in order to experience the lifestyle you anticipate to have in the future.
4. Saving more to offset the previous 3 examples doesn’t really work because there is no absolute when there is an unknown in the equation. That unknown being the date of your death.
5. Free Cash flow. Free Cash flow is more critical than rate of return because Free Cash Flow is money that comes back to you to use over again.

It is imprudent, to say the least, to let anybody determine how much Income for Life you will need to live adequately.  In fact, having an Income for Life mindset is an unproductive, spend-down-the-savings mentality that nullifies productiveness and therefore your ability to participate in free cash flow modal of creating wealth.

That is why the Perpetual Wealth Code™, developed and advocated here at McFie Insurance, focuses on recovering money you spend.  Because money you spend is money that is lost to you indefinitely.  By implementing the Perpetual Wealth Code™ you can recover the cost of acquisition in your life and enhance your lifestyle in the process.

Everyone lives and spends money until the day they die.  So merely focusing on an Income for Life doesn’t make sense because who knows when death will actually arrive at your door step.  Besides, once you understand how to recover the money you spend, an Income for Life and retirement no longer carries much appeal because you can now control your financial future.  And that beats simply hoarding up money, living on an austere budget for the rest of your life, and hoping against hope that you don’t run out of money before your clock stops ticking.

Dr. Tomas P. McFie

Most Americans depend on Social Security for retirement income. Even when people think they’re saving money, taxes, fees, investment losses and market volatility take most of their money away. Tom McFie is the founder of McFie Insurance which helps people keep more of the money they make, so they can have financial peace of mind. His latest book, A Biblical Guide to Personal Finance, can be purchased here. 

[i] Robert Shiller