How Suze Orman Scammed The World (2016)

Sep 10, 2016

  1. scagnt83
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    scagnt83 Worldwide Expert of Everything

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    Problem is that real life statistics say otherwise.

    One of the quickest growing segments of life insurance over the past 5-10 years has been GUL. The majority buying it are age 50-65.

    They bought term and invested the difference. Only to find out that they still need life insurance.... just not as much as they used to need... which is a good thing since it is triple the price at that point. It is not uncommon for a 60 year old to spend $6k - $10k per year on a $300k - $400k GUL. And they are the ones requesting the coverage, no "convincing" required.

    There is the income replacement needs (loss of SS and/or Pension benefits). Most people do not want their spouse to be forced into downsizing after they pass. And 1 less person does not equal 50% less in expenses.

    Then there is the fact that many retirees are buying new or second houses, helping with children or grandchildren (from living expenses to college expenses to healthcare expenses), financing new boats/cars/toys, and even starting new businesses. LTCI care for parents and themselves is a huge hit for many too.


    Then there are the surviving children to think of. Do they have funds set aside to cover probate expenses and immediate final expenses? Are the assets set up so that the kids have immediate access to sufficient money to cover all of that? Are they in assets that will make sense from a tax and economic standpoint to dip into?


    Then there is just being smart about money. With life insurance, a 50y old could pay for $100,000 in final expenses with about $25k in assets. Which leaves his wife or kids with an extra $75k of his hard earned money.

    Financially savvy people who want to maximize what they leave their loved ones with, utilize life insurance to pay for a large expense with a small amount of money.



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    15% retirement savings rate is not realistic for middle class families. The average deferral rate for the middle class is around 4%. Most can afford to double that... but very few can afford to triple that if they have children.

    So his "solution" starts out with unrealistic assumptions for the majority of people he is speaking to. They are not saving 15% of their income per year and most likely never will be.


    The average middle class family will need every bit of their SS/Pension/Savings to create the income needed for retirement. Most are shocked that $1mm only gives them $40k per year in retirement income.

    That means most middle class surviving spouses will suffer a drop in income when the other dies (due to SS and any possible pension). Most people, once in that position, see that scenario as undesirable.


    The average middle class family does not need the majority of their life insurance in WL or UL. But they would benefit greatly by having a small portion in it. Active life agents speak to countless 55-65 year olds who wish they had bought a small WL or UL when they were young (because it would be a large WL/UL now when they are old).

    It is all situation specific. But the majority of people age 60-65 these days still see a need for life insurance. The % that still see a need for it is only growing. Younger generations should take notice of the actual real life statistics and not some fantasy scenario that is not holding true for the majority of americans.
     
    Last edited: Sep 16, 2016
  2. xrac
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    xrac Guru

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    Life happens: disabled and can no longer work, forced early retirement when you are laid off at 60 and can't find another job, health insurance premiums skyrocketing, 1% interest rates that allow for almost no investment growth without unacceptable risk, elderly parent care, grown kids at home who cannot find jobs, catastrophic stock market drop near retirement age, financial advisor embezzles money (this happened locally with a guy who stole over $1,000,000 from people I have known), etc., etc. etc. BTID does not work for a lot of people because Life Happens.
     
    Last edited: Sep 16, 2016
    xrac, Sep 16, 2016
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  3. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    A "financial plan" that does not account for the realities of life (as xrac outlined) as well as a method for efficient spending of wealth for the future (retirement, college, emergencies, opportunities)... is NOT a financial plan.

    That's merely a 'wealth accumulation' plan built on a lot of 'hope' and past investment or market statistics.

    These kinds of "planners" really aren't planners, but I would call them "financial account managers". These "financial account managers" know all the rules surrounding these accounts, and may make account investment recommendations... but they really aren't planners that look much beyond the money to be managed. (I used to be one years ago.)

    Just my opinion.
     
    DHK, Sep 16, 2016
    #33
  4. Cornelius
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    Cornelius Guru

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    Tom Hegna has some great videos on you tube about retirement. He makes a strong case for guaranteed income at retirement. For the masses the retirement years are going to be ugly.
     
  5. DHK
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    DHK "YOU CAN'T HANDLE THE TRUTH!"

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    I like what Curtis Cloke said in a recent article: "Buy income and invest the difference."
     
    DHK, Sep 28, 2016
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  6. junkman
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    Round & round we go. I've sold term and WL. First Colony in one of its iterations offered a conversion to GUL with a no-lapse feature. Most converted unless they were still healthy to buy a low premium contract. Out of those that converted only 1 really needed it and he had a child that would need care for life.

    Saying that people "can't" afford to save 15% misses the point. They drive new cars, pay $100/month or more for TV, take vacations etc. These people don't look at their earning ability as a capital asset that has a finite life expectancy. You have to change from having your wage earning ability as your support to having other capital assets.

    I tell my self employed clients that they only get to spend 50% or less of every dollar earned. Everything else goes to taxes and investments. For many, spending 50% is too much.

    It's interesting. Some are detailed oriented and want to budget top down. Others will use rules of thumb. The top down people want some type of planning system to arrive at target numbers. The others say "screw it. Max out IRAs, SEPs, HSAs, ESAs, save a little more, pay taxes, buy some insurance and spend the rest". Both processes get to the same place. It can take almost $100,000 before spending on anything except, savings, taxes & health insurance.
     
    junkman, Jul 28, 2017
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  7. eersfan
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    eersfan Super Genius

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    Her CFP designation merely means she passed the exams. Having been in this business since 1975, I've met a lot of agents with the CLU designation who don't have a clue as to what they're doing.
     
    eersfan, Aug 25, 2017
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  8. Scotty1980
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    Scotty1980 Expert

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    Wait all those videos I spent hours watching were a waste?
    JK you have to be a fool to believe.
     
  9. FBN
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    FBN Super Genius

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    Orman is good at one thing - marketing herself. The only financial entertainer worse than Orman is Cramer on CNBC. A real clown.
     
    FBN, Dec 13, 2017
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  10. junkman
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    junkman Guru

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    You need to move your HSA.
     
    junkman, Jan 22, 2018
    #40