It’s not too late to get a GED, but then you might too smart to sell that shitYour opinion is acknowledged and noted. It's wrong, but you are entitled to it.
First, there is no such thing as a "financial advisor". It has become an industry accepted term, but it is not a regulated term. There are investment advisors (subject to Investment Advisers Act of 1940), there are Registered Representatives, and there are Insurance Agents.
If you want a technician to analyze your investment portfolio, then you want a CFA. Otherwise, the CFA is not much of a "client-facing" designation. Many/most CFAs are portfolio managers. It's still a rare combination to find a CFP/CFA, although it is climbing.
To all the financial advisors: why CFA? why not CFP? | AnalystForum
As you stated, just having licensing doesn't make you competent. It makes you liable for your recommendations. I've been saying this for years.
There are a few aspects that are missing from your analysis - PARTICULARLY for middle class people.
1) Taxation of social security retirement benefits. Did you factor this into your decision? Did you know that based on taxable income, your social security benefits will be included into your taxable income in retirement? Did you know that those limits of includable income haven't changed since 1993? Do you think there is any incentive to adjust these limits for inflation?
Benefits Planner | Income Taxes And Your Social Security Benefit | Social Security Administration
Social Security History
Note: Loans and tax-free distributions from life insurance do not count as "income" for IRS purposes. Because they are a loan or return of principal, therefore not "income subject to taxation". This can help with the retirement income scenario... with a properly funded and structured policy.
2) Life insurance is NOT an investment and should not be compared to one as such. No one retires on only life insurance. However, cash value life insurance is a great liquid SAVINGS vehicle - where you can make other investments FROM that cash value. Particularly short-term investing. Borrow from the policy for a couple of years and pay it all back. In the meantime, pay the interest on the loan so you satisfy the loan & illustration requirements so the policy will perform to the illustration.
3) For using life insurance as a retirement asset, it's all about the VOLUME of interest, not the rates of interest.
Let's say that you have $500k of cash values in a policy. And that $500k can earn 10% and you have an up-market, so you earn $50k to the policy.
Let's suppose that you take a loan from the policy of 5% of the total value or $25k at a 5% loan.
And assuming (I hate that word) that the policy was structured as lowest death benefit and highest cash values, that you have a reasonable cost of insurance (let's just say $10,000 for a year).
$500k - MINUS $10,000 life insurance cost = $490,000 + assuming a 10% market increase or $49,000 = $539,000. Then you borrow AGAINST the policy for $25,000 (5% of the value + 5% loan cost for only $1,250). The difference about this distribution is that you borrow AGAINST not FROM. Your original $539k continues to grow, but with a SMALL volume of loan interest ($1,250) for that given year.
Now, you can easily add more to both columns each year for gains to the policy and increasing loan costs. 2nd year with an additional loan would cost $1,250 + $1,250 = $2,500 total 2nd year loan cost, but look at your potential of growth. Or even with a 0% credited, you still have the shot with IUL for a policy gain even after policy costs.
I may have grossly over-estimated the insurance cost, but you get the idea. Even after all that, you still have a policy gain.
So, you're wrong because you are comparing rates, rather than volume of interest.
Oh yeah, I'm no CFA... and I did not graduate high school with my class... but I know my $#!*. (Although I do humbly admit that I am far more analytical than those you are accusing of not being too smart. I had undiagnosed ADD/ADHD and was a horrible student over 20 years ago.)
