Ted Brenna designed the 401K so employees could defer taxation on their savings until they retired and were in a lower tax bracket. Today he laments his creation stating that it wasn’t meant to be what it is today. Employers were supposed to cover the fees. Then there’s stock market losses, inflation and higher taxes.

Mr. Brenna now uses stacked annuities and life insurance in his own retirement plan. Note: stacked annuities can be of different terms and either deferred or immediate payout contracts.

Starting at age 30 you have tax deferred savings of $23,500 per year for 35 years until you retire at age 65. That’s $1,958.33/month of untaxed money with the expectation of a lower tax rate in retirement.

When have taxes gone down?

So, in 35 years you’d have $822,500 in principal and hopefully after fees you add $177,500 more in interest to add up to $1,000,000. That’s your accumulation over time. When you go to the payout phase, you’d get about $5,000/month for the rest of your life.

This is a simplified example for illustration purposes only.

The spreadsheet below shows that using life insurance at an early age and adding to it over time provides cash values that exceed 50%of the above example 401K using much less money to do it. The example uses a very small face value or death benefit policy.

Obviously, you can double or triple your policy premiums and still be considerably under the MAX 401K contribution. Either way, the person responsible for sending money to your retirement is you!

Another advantage is that the premiums are paid with after tax money so money withdrawn at retirement up to the value of the premiums paid would be tax free.

Plus, unlike a 401K you have easy access to the cash to borrow repeatedly.

But wait, there’s more! The policies used are special in that they behave as if you’ve never touched the cash and they continue to grow!