Dan walks through his retirement plan using whole life insurance and the Infinite Banking Concept. He put $440,000 into a policy from age 58 to 70, then plans to withdraw $23,000 yearly starting at 71. His illustration shows an $875,000 estate value at 80, accounting for tax clawbacks and policy loans.
Questions this video answers
56 (learned about it at 55 and started practicing shortly after; later states he started capitalization at 58).
12 years, from age 58 through age 70.
Just shy of $440,000 over 12 years.
Begin at age 71, withdrawing $23,000 per year (illustrated for 20 years).
5% (assumed/conservative rate for illustration).
Chapters
It all begins with the way you think. So don't think about an age you're going to die. That's what I'm going to tell you. So what do you do? Well, the more income you have, you have to be aware of how do I reduce the amount that I'm going to give to the government?
Have you ever wondered how much money that you'll need to put away or how much passive income that you'll need to. To cover your costs and your needs and your desires? When you get to that stage of life where you decide, hey, I want to back away from what I'm doing now and have more free time. Some people call that retirement. Now, I don't like the word retired because when you think about it, it says like, you're done. You know, you take a vehicle at every service, you retire it from service. Not an actual great picture to create your mind. I believe in, you know, just making the best of every day that the good Lord gives us. And I hope and pray that he gives me lots of good days on this earth to keep on doing what I'm doing. I don't know what your perspective is on, you know, passive income or retirement time. I know for a lot of us, we just left wondering, well, how much would I need? How could I, you know, reduce the likelihood that, hey, it doesn't last? So one of the things I'm sure you're familiar with, if you've given any thought to retirement planning, is that they start with plan for how long you plan on living. Well, I don't like that right off the bat, how long I plan on living. I want to live as long as the good Lord gives me breath. And I don't want to put a number in my mind. I think it's dangerous, personally. I think it's dangerous to put a number in your mind. Now we can go look at the stats and we will just, you know, because all those are is numbers. They don't really matter. And when I really honestly believe the longer I've lived, the less I will ever entertain putting a number in my mind. Because your mind is one of the most powerful things that you have. It is the most powerful part of your body. It controls a lot of what you do and how you behave. And, man, it all begins with the way you think. So don't think about an age. You're going to die. That's what I'm going to tell you. So what do you do, Dan? That's fine. But, hey, how do you get through this? Well, that's what I want to show you. One way that you could supplement what you're doing now or some people even know have really adopted this as one of their primary passive income sources when they get to a later part in life. But whichever way you choose to do it's going to be a benefit if you utilize this process. And what I thought today is why not just give you some insight as to what I'm doing. That's right. I'm going to use a very specific case based on myself and no one else. So it's something I can speak to because it's part of what I planned. So with that let's go look at a few things and first we're going to talk about statistics just to get them out of the way and then we'll go on from there. So Henry did a great job and Henry's one of my colleagues. He put out a video recently. It's called my RRSP in Canada ends at 71 now. What? That's a great video and the reason why I like it so much. He talks about a lot of the things that happen as you start to take income later in life. You're always going to be taxed and things like we've been, you know, taught to. You'll be utilizing old age security later in life and your CPP and all those things. Well, the more income you have, you have to be aware of how do I reduce the amount that I'm going to give to the government. And that's one thing that you'll learn from this little illustration. That's part of my plan. I don't want to, you know, have all of my CPP or old age security clawed back because my tax rate so high. So I'm going to utilize techniques and this is one. It's called the insured retirement solution. So just so you understand what that's all about, this little diagram does a great job of it. You just have to have a plan to start to capitalize dividend paying whole life insurance contracts. Well, if you know anything about what we do here at Ascendant, as you know, we teach the concept called becoming your own banker, the infinite banking concept. And we teach Canadians about that every day. One of the things about that is you use the platform. The platform we use is par whole life and it's the best platform we found. So not only am I utilizing this policy that I'm building for passive income, I'm also using it for banking. In the interim, I'm going to be using that policy right up until I want to stop using it for other things in life and start using it for passive income. So if you understand the infinite banking concept and how it works, and if you don't, here's what I'm going to encourage you to do. We have a great 90 minute video that can educate you on the infinite banking concept. It's called watchibc.com There'll be a link, just go to that, keep it. And when you have 90 minutes, watch that. I'll just help you understand what I'm talking about when I say I'm going to utilize that policy as part of my banking system. Because I am. So I'm funding my banking system, I'm building up capital. It's called capitalization. And what's the value of capital? Well, it's huge. So I'm capitalizing a policy for this specific purpose and I'm capitalizing other policies. But we're going to talk about one and when I get to a stage that I decide, okay, I put enough capital in, I'm going to stop putting capital in. That's right, I'm going to stop and then I'm going to take that policy and I don't know at this point whether I'm going to use policy loans with the life company or if I'm going to use a commercial bank and collateralize that policy there. So this little diagram here shows you can go either way through the life company. And hey, I love those life companies because they do a great job and I like the mutuality with the life companies that I have my policy with so there's no shareholders in and I have control all the time. There's also a case to be built here in Canada for reducing the tax and that's why I may, when I get there consider using a commercial bank. It's not something, if you took this process and used it, you'd get to make that decision too because hey, you're the owner of that policy. You get to dictate whether that happens or not, how you do that. And it's just something that you would want to work with a good coach just to help to understand all the things you need to understand just so you end up with a solution that suits you and your family best. So this is kind of the, this is the process that I'm using and as I said, right now I've got a multitude of contracts. This one I'm going to look at is a very specific one and it was specifically built to really going to Use them. I can use them all for passive income, but I'm just going to show you what this one would look like. And for both me and my wife, we have these type of policies. And so I'll just give you a high level look at what it might look like. So the first phase was the capitalization phase. And what I wanted to share with everybody was, hey, when I first got to know and learn about the infinite banking concept, I was 55 years of age and I started to practice it shortly after that. Once I did my due diligence and started to, you know, put some policies in place and started to bank with them, you know, so there was something that I had, I didn't have a lot of years because, you know, the fact of the longer you get into a policy, the better the compounding is. So I didn't get a start at 45 or 40 or 35, which I would have liked, but I got to start at 56 when I first learned about this, but I didn't know about it before that. So I was saving money in different ways, in conventional ways. And some of that was in registered vehicles, some was outside of registered vehicles. So I had access to capital. And yeah, I know if you take it out of a registered vehicle right away there's a withholding tax and there could be another calculation done at the end of that tax year. So you have to work with an accountant in order to do that. But I've done that. I pulled money out of registered accounts that I have and put them in to some of my policies. So I've been capitalizing this policy for a number of years and I plan on continue and plan on capitalizing it for 12 years. So now we're going to look at numbers. I just wanted to warn you, numbers are numbers and it can get to be kind of busy. But I just wanted to share with you what my capitalization phase looked like. So this is it. I started when I was 58 and I'm going to capitalize for 12 years all the way through age 70. And this particular annual premium is what I'm putting into it each year. That was the decision that I made. Again, I had funds built up that I could do this with, plus I keep on earning an income. So as you can see, over those 12 years, I'm going to put just shy of $440,000 into my capitalization of my banking system that I can leverage for a multitude of things. So that's what I'm doing. I made a conscious decision to Put, you know, money. So I'm residing putting my money into this particular contract because I understand how they work. If you don't, again, I'm going to encourage you to really spend time on our YouTube channel learning about the infinite banking concept because there's more living values with dividend paying whole life insurance than there is death benefits. So you can get the best of both worlds when you utilize the value that you build up in these contracts and then you know, the death benefit critical part, it helps your beneficiaries out at some point when you're no longer here. So there's lots of pluses to this, but I just wanted to show you how I was planning on capitalizing this one policy I have now the passive income phase. So I'm not in this. I have to acknowledge that I'm not there. I don't hurry to get there. But this is what I plan on doing when I get to that stage. And it will be some variation of this again, I don't know what I'll think when I get there, but this is what I have as part of my plan. So the plan at this point is when I get to age 71, I start to take value out of that particular policy that I have structured this way. So as far as I've been using it for banking right up to this point and I'm going to have a very clear goal that the loans that I have outstanding against this policy, I'm going to have them paid back by this time. So I have this value to utilize for a good 20 years. Well, I can go past 20 years, but I'm just showing you 20 years of taking out $23,000 a year just to supplement. Now say, well, that's not a lot to live off, dad. But don't worry, this is not the only policy my wife and I have. So I just wanted to show you one. And if I use it the way it's shown here on this little slide deck, is that.
Going to capitalize the interest? I'm not going to pay the interest back on the loan. I'll probably pay the interest for at least five years. But again that's a decision I'm going to make when I get to that point because who's in control? I am. I get to make that decision. So this particular illustration, I haven't paid any interest back after I start to take out that passive income, capitalize all the interest at the bank. I used a 5% interest rate for this example because I don't know what the interest rate is going to be. I know I could get it for less than five now, and I don't know what it'll be when I'm, you know, when I start to use my system. But I just, you know, wanted to make sure I was really conservative and this look, because if it was less than 5%, numbers would all be better for me. But as it is, I use 5%, so that's something I want you to be aware of. Now, as you can see, as I take out that 23,000 a year, the bank loan or the loan at the life company is going to keep on growing. That's just the way it works because haven't paid the interest and haven't paid the principal back. So it's just going to continue to grow. But I want you to see is that after those 20 years, how much would I have taken out? Well, it's more than I put in. You can see the number. It's like 460,000. And when you look over the right hand column, that's the net estate value. So that's after, you know, if I, God forbid, you know, got ran over by a bus when I was 80, my family would still get $875,000 over and above.
You know, the cost of this loan would be deducted and 875,000 would go to my family. Is that more or less than what I put into it? Well, that's more. And even at the end of 20 years, if the good Lord took me home at age 90.
I would still be given passing on to my family more than I ever put into this policy. That's right. You just go down and look at age 90 and look over. It's 600,000 still of net estate value. That's what the size of the check that would go to my beneficiaries. If my good wife's alive, that would go to her. And if she's been utilizing her system this way, where do you think that's going to go? Well, it would be pay back her loan against her policy. And it just, you know, leaves more for the next generation. That's one of the principles that my wife and I have. We want to help the next generation and the generation after that to get set up in their own banking systems. So it's going to go to capitalize policies for our children and our grandchildren. That's what our plans are. So that's why when I plan, I look at all probabilities, I'm going to leave something behind for my beneficiaries and it's going to be more than I ever put into this system now, even if I live to be a hundred. What do you mean, Dan, if you live to be a hundred? Well, let's take a look at a big picture because I don't know about you, but you've probably heard that one of the fastest growing demographics are out there are the centurions, the ones that live to be a hundred or more. And I've been blessed to know those people in my family that have made it to 100 years of age. So I know it's doable. And hey, what happens if Dan was still kicking at 100? Well, that'd be a great outcome because I plan on living past 100, just so you know. But yeah, let's take a look at that. Well, this is just, you know, some numbers. This was the total premiums that I deposited, the amount I took out over 20 years, the estate value at age 90 and still the estate value at age 100. And what I really want you to understand is this is reflective of never paying a penny back on that 20 years of withdrawing that $23,000. And that is because with this particular product, the cash value never stops growing. It has to keep growing all the way to age 100. And that's the way they work. So you can see when dan's at 100, he's still going to have $475,000 of estate value in his policy. Now, if I live past 90, could I use some of that? Well, yeah, I could have drawn that down more. It's going to be, you know, a choice my family and I get to make. So that's just one thing that I wanted to talk to you today about was if you ever wondered how much am I going to need for either a pile of money or some passive income stream to help me in my retirement. Well, this is one thing I want you to consider, and the best thing, and I think I covered it pretty well, the best thing is that it's not something you do. Like, you don't put your money in some prison while it builds up. As you're building it up, you get to use it. That's the nice part about the infinite banking concept. And when you start to understand the value that comes from controlling the banking function as it relates to your needs, that's when you really see the possibilities. With the infinite banking concept. Why is it called infinite? Because the opportunities are infinite. So I hope you found this useful use of your time. And I just wanted you, you know, really just to challenge your thinking, like you were always wondering. And I know you, you know, I hope you're doing some thinking about how am I going to do this? How am I going to make sure I'm looking after myself well enough so I don't become a burden to others. So I hope you found this useful and, you know, some thing that you can consider to do, and I'm going to encourage you. Again, go watch IBC.com it's called watchibc.com if you don't know about the infinite banking concept. It's 90 minutes long and it's just great way to understand how it works. We've got a lot of other great videos on this channel, so just go and watch them. And again, until next time, take care.
