"We rob banks." Bonnie and Clyde, 1967
Florence was just fourteen at the end of WWII. She was one of a dozen children. She and her husband, Jerry were married in 1951. They had only one child and lived a very comfortable life in one of the nicer neighborhoods of a medium sized mid-western town.
Flo, as she was known to her friends and family, was widowed in 1993. Jerry had always managed their money, so Flo was not really ready when it came to taking charge of the family's finances. In desperation but with confidence she turned to her daughter Mary Jane, an accountant, and her husband Vern, a broker for one of the Behemoths.
As it turns out, Mary Jane and Vern could have been named Bonnie and Clyde. What Vern didn't lose of Flo's money in the market, Mary Jane spent.
Today Flo is living on Social Security, income from a reverse mortgage, and a small pension; her credit card balances are also creeping upward. The six figure life insurance policy proceeds and substantial savings that Jerry left her are gone. Her daughter and not-too-bright-or-honest son in law Vern are promoting a program that has families taking all of the equity out of their homes and putting it into financial products that promise amazing returns but guarantee nothing.
Bonnie and Clyde, as reprehensible as they were, were at least honest about what they did; "We rob banks." They didn't want the people's money. They wanted the banks' money.
"You know how to whistle, don't you, Steve? You just put your lips together and blow." To Have and Have Not, 1944
"What would a Money for Life Guide have done for Flo?"
Knowing how to deal with money and knowing how to whistle do not come naturally and Flo wouldn't have a great deal of time to learn. Jerry died at age 63. He left Flo, age 62, with $250,000.00 in life insurance, almost $200,000.00 in IRA money, a $190,000.00 home that was paid for and $90,000.00 in savings and bank CDs.
A Money for Life Guide would have diversified Flo's investments. S/he would have placed the life insurance proceeds and IRA money into a variety of secure, guaranteed income annuities. These would deliver initial cash flow of about $2,000.00 per month without using any principal. Flo's income could increase if the underlying investments performed well, but would never decrease.
Flo also qualified for $1,800.00 per month in Social Security benefits. This benefit also has an inflation hedge built in. In other words, Flo would be debt free - remember that her home was paid for - and have an income of almost $4,000.00 per month that she didn't have to work for but that she wouldn't outlive.
Flo's Money for Life Guide would also move much of the $90,000.00 that was in the bank into a cash value life insurance policy - EUREKONOMICS™ Account - over a period of four or five years. This creates a death benefit legacy for her daughter and for her possible grandchildren.
The cash values in her EUREKONOMICS™ Accounts are still accessible by Flo if she needs them for any reason. In addition, the principal amount in her annuities, along with the equity in her home serve as Flo's hedge against future medical and long term care expenses.
To summarize: Flo would have set the four pillars of a her successful personal economy on an unassailable foundation. She would...
Be debt free,
have an income she doesn't have to work for and she won't outlive,
have money to deal with life's surprises and
leave a legacy of wisdom and wealth for those she cares about
Finally, Flo continues to work part time at her passion but does not earn enough to reduce her social security. This money is being deposited into another cash value life insurance policy - another EUREKONOMICS™ Account - that Flo can access if and when she ever needs it and add to her legacy if she doesn't.
"Love means never having to say you're sorry." Love Story, 1970
"What happens to the relationship with the kids if Mom uses a Money for Life Guide instead of Vern, who is in a competitive position?"
Vern worked for a Behemoth. He was bound to a set of practices designed by his employer. The Behemoths and their minions generally have three goals built into whatever they do.
Get as much of the customer's money as possible into the Behemoth's coffers
Sell investment products that produce the highest income for the Behemoth
Restrict the activity of its brokers to avoid law suits by disgruntled customers
The Money for Life Guide might have been able to explain the principles and practices that s/he used to create the foundation and framework for Flo to Mary Jane and Vern. It's more likely that the peace of mind and security that accrued to Flo by following the Money for Life Guide's advice would have been evident to the kids and caused them to learn more.
In any event, it is seldom wise and never the responsibility of parents to conduct business with children - especially when the future security of the parent is at stake, as it was with Flo. If Mary Jane and Vern were honestly concerned about Flo and her future they would recognize this themselves and accept Flo's decision.
"Love means never having to say you're sorry."