The first of the Baby Boomers turned 60 this year.  I happen to fall right into the middle of this group (those born between 1946 and 1964), so I’m pretty familiar with the financial challenges facing many of my peers.  For many, right at the top of the list IS the fact they’re grossly unprepared for retirement.  Survey after survey shows that many graying boomers still have no idea how much money they’ll need to retire comfortably.  Worse, in a country with a negative personal savings rate, millions are far behind on their wealth accumulation goals.  If you or someone you know is headed for a severely under-funded retirement, fear not.  I’ll show you how you can create the retirement you want - even if you’ve fallen far behind on building your nest egg. The first of the Baby Boomers turned 60 this year.  I happen to fall right into the middle of this group (those born between 1946 and 1964), so I’m pretty familiar with the financial challenges facing many of my peers.  For many, right at the top of the list IS the fact they’re grossly unprepared for retirement.  Survey after survey shows that many graying boomers still have no idea how much money they’ll need to retire comfortably.  Worse, in a country with a negative personal savings rate, millions are far behind on their wealth accumulation goals.  If you or someone you know is headed for a severely under-funded retirement, fear not.  I’ll show you how you can create the retirement you want - even if you’ve fallen far behind on building your nest egg. So clearly, most of us do not contribute enough for retirement.  Please, max out on your IRA, SEP and or 401k contributions if at all possible.  But now let’s talk about the greatest savings plan available called a Defined Benefit Plan.  I mentioned Defined Benefit Plans recently and was surprised to learn how few people know about them.  I was even more shocked how little these life saving plans are actually discussed.  A DB plan is a plan designed to pay a target level of benefits at retirement age.  These benefits can be based upon a fixed percentage of your average salary, a flat monthly dollar amount or a formula based on years of service in a business.  Most DB plans I have seen simply state the maximum allowable contribution limit based upon the participant’s age.  Going back to the example we were using, a 50-year-old who wants to retire at age 60 can contribute approximately US$168,000 per year.

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Let’s take a look at some real life examples. 

Contribute Even More Than US$168,000 a Year with a DB Plan 
Recently, I met S.W. at a Sovereign Society conference.  S.W. is a retirement planner’s dream client. He’s a 51-year-old, self-employed physician with no other employees.  S.W. makes a nice living with just over US$350,000 per year.  And S.W. was shocked when I told him he could be contributing approximately US$177,000 into a DB plan. 

Most of us won’t be quite as lucky as S.W. We’ll either have other employees to deal with or we won’t make his high income. But, amazingly, a DB plan can work nearly as well for most business owners. 
Here is another example: 

Tax Savings & Global Investments 
A DB plan is the number one legal way to reduce your taxes.  That’s right I said the number one way to reduce your taxes.  Just like any other retirement plan, the contributions you make to a DB plan are all pre-tax.  So if the 50-year-old doctor S.W. contributes the full US$177,000 to his defined benefit plan, he only pays taxes on his remaining income.  That means out of a US$350,000 income, he only pays tax on US$173,000. 
These defined benefit assets can also be invested virtually anywhere in almost any kind of investment.  We’re not just talking about the traditional mutual funds you see in a 401k - we’re talking about a world of investments available at your finger tips.  You can invest in real estate, both domestic and foreign, precious metals, foreign bank accounts, non-U.S. currencies and many, many other investments you have read about here in The Sovereign Individual.  If properly structured, it’s actually quite easy to allocate and invest your retirement plan assets anywhere in the world. 

Plus, these assets grow on a tax-deferred basis until you start to withdraw them at retirement.  That means the law of compounding work is working in your favor as you continue to save assets you would normally have to pay taxes on.

A Defined Benefit plan allows you to maximize your retirement savings in a way no other retirement plan does.  This plan reduces your income tax and gives you the freedom to invest your retirement plan anywhere in the world.  If you are one of the fortunate ones who are in a position to implement a DB plan, I would urge you to consider it today.  For more information on DB plans, including a custom designed plan for you, please contact my office for additional information. 

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