The first economic power is the potential for investments. This involves accumulating wealth through traditional investment vehicles like stocks, bonds, 401(k)s, and IRAs. While investments offer high growth potential and liquidity, they are inherently volatile.

Relying solely on market returns when preparing for retirement introduces significant risks, such as sequence of returns risk, where a market downturn early in retirement can permanently deplete a portfolio if withdrawals continue.

The second economic power is actuarial science, or risk pooling. This power is harnessed through insurance-based products like whole life insurance and income annuities. Unlike investments, which are solely designed to make our money grow, insurance products are manufactured in such a way that they provide an efficiency that it’s not possible to achieve with an investment-only approach.

The WBC approach establishes that these two powers were always meant to work together. They complement one another and create some of the following results:

1. Permission to spend more: Research suggests that incorporating actuarial science can support a higher level of retirement spending and a larger legacy than relying on investments alone.

2. Self-Funded Pensions: For those without traditional employer pensions, this approach uses insurance-based products to create a “personal pension” for consistent and reliable cash flow.

3. Volatility Buffer: It creates a shield against market volatility by having access to cash that is not directly correlated with the markets, allowing investors to leave their market assets untouched during downturns.

4. Permission to Invest: The contractual guarantees of the insurance products can give retirees the confidence to invest their remaining assets more aggressively for growth.

5. Take a glance at your numbers: With WBC’s proprietary calculator, we can see, with your own numbers, the difference between using one or two powers.

Doesn’t anyone stay in one place anymore?” — Carole King

Hello friends,

The labor market has shifted dramatically. Employees now have more options than ever, and many don’t remain in the same role for long. This presents a real challenge for business owners—especially when they’ve found one or more key employees who significantly contribute to the company’s success.

The result is a robust “KEY EMPLOYEE INCENTIVE” strategy.

Here’s a detailed breakdown to help retain those valuable team members for a defined period:

• Purpose

To create a mutually beneficial incentive that encourages a key employee to remain with the company for a specified number of years.

• Funding

The employer funds a permanent life insurance policy (Whole Life) over an agreed term—say, 10 years. The employer owns the policy, and the employee is the insured. The incentive is awarded only if the employee completes the full term.

• Cash Values

During the term, the employer can access the policy’s cash value to support business needs such as inventory, vehicles, or other expenses.

• Death Benefit

Through a Split Dollar arrangement, if the employee passes away before the term ends, the death benefit is divided equally between the employer and the employee’s beneficiaries. This ensures the employee’s family receives support, while the employer has resources to recruit and train a replacement.

• Policy Transfer

At the end of the term, ownership of the policy transfers to the employee. The policy is fully paid up, so no further premiums are required. The employee remains permanently insured, and the cash value continues to grow—available for use as they see fit.

• Taxation

Upon transfer, the policy’s cash value becomes a taxable event for the employee. The employer may deduct all premiums paid during the term. To simplify things, the employee’s tax obligation can be paid directly from the policy’s cash value at the time of transfer.

This incentive structure benefits everyone involved—providing security, flexibility, and long-term value. If you’d like to explore how this strategy could work for your business, I’d be happy to discuss it further.

Make an appointment, and I will be happy to discuss this subject with you.

Thank you for reading.

Warm regards,

Roberto Medina

An effective approach to prepare for the future.

“We know what we are but know not what we may be.”

1. Shakespeare.

Longevity has become a blessing to many American families. Thanks to healthy habits, modern hygiene, and science, we are living longer than ever. It is not uncommon to hear that some of our parents or grandparents are living to be 90 or even 100. We have the chance to enjoy our loved ones on more birthdays, trips, and celebrations.

But with longevity, we also have a higher chance of having health care events along the way, including what is known as long-term care.

Individuals need long-term care when a chronic condition, trauma, or illness limits their ability to carry out basic self-care tasks, such as bathing, dressing, or eating. The care needed to perform these activities is mostly NOT covered by health insurance. These events can last any number of years, and they can be very challenging, emotionally and financially.

Despite the strong likelihood that a person will require some form of long-term care, a sizable percentage of consumers are under the impression that they won’t require this care. Recent research indicates that just 16 percent of Americans forty and older report doing “a great deal” of planning for their long-term care needs; 65 percent report doing very little such planning or no planning at all.

The unknown cost of health care can be a significant risk to any retirement plan. Unlike most spending in retirement, health care spending increases with age on average and is far more volatile. Almost 70% of people turning 65 today will eventually need some form of long-term care in their lifetimes.

With traditional health-based long-term care insurance, you pay insurance premiums to help protect yourself if you require long-term care. As history shows, the premiums will likely increase over time, and if you never need it, this form of long-term care insurance offers no benefit, and your premiums are lost.

A more efficient generation of protection is finally becoming widely known. It’s called Asset-Based Long-Term Care insurance. Someone very smart realized that the problem could be solved by letting the LTC benefits arise from either a life insurance policy or an annuity. Because the data and actuarial science are abundant in these products, this was able to bring stability to the equation.

This new approach allows the insured to cover long-term care expenditures for a chosen number of years and even allows the insured to choose lifetime benefits. The premiums are guaranteed never to increase, and in case the care is not needed, the assets are transferred to the insured’s beneficiaries. On top of this, current legislation allows you to receive these LTC benefits, tax-free.

Having the right long-term care protection can also help reduce the emotional challenges that will arise from a long-term care event. Family dynamics can be rattled.

Make an appointment, and I will be happy to discuss this subject with you.

Thank you for reading.

Roberto Medina

Over the last month, the markets have experienced significant volatility. The consequences of a steep downturn can be far-reaching because many people have a stake in the markets. To give you an idea, more than 70 million Americans own a 401 (401 k) or similar plan.

It is estimated that 62% of adult Americans own some stock. So, as you can imagine, the implications of abrupt changes in the market can be substantial. Even with ups and downs, investing in the markets is a good way to grow our money.

Historical data show that growth can be expected most of the time. However, there is always risk. The markets are sensitive not only to performance but also to global events and political decisions. Once your dollar is committed to whatever stock, it will be at the mercy of such volatility.

The effects of such volatility have varying impacts depending on the investor’s age.

The young investor knows that investing is a long-term proposition, some losses along the way are expected, and they have time for the markets to recover.

In turn, someone who is close to or already in retirement can be deeply affected by a big fall in the markets. This situation may force the retiree to lower their spending levels and sacrifice some of the things they are used to doing or having.

The latest financial planning research suggests that we can actually create a line of defense against market volatility and other risks, such as longevity and spending shocks.

We do this by including some of our savings in instruments that are not directly correlated to the markets, such as insurance products.

It has been found that striking the right balance between investment and insurance instruments not only protects us from unexpected events but also enables us to enjoy a higher income in retirement.

Mr. Wade Pfau, an authority on Retirement Income research, writes in one of his books, “The most efficient retirement strategies require an integration of both investment and insurance.”

Please feel free to contact me so we can discuss these strategies in more detail.

Thank you for reading.

Roberto Medina