What Happened When I Moved My RRSP Into Infinite Banking (REAL Numbers)

Do we think that in the future the government's going to need more taxes or less taxes? How are you being taxed? The plan is really you're going to take $1, get a tax break on that dollar, and then when you turn it into $5, the government's going to show up and tax the $5. But you know what? If we understand the problem, then the solution's going to matter.

I actually felt really mad. I thought, why didn't I know about this before? Why wasn't there somebody like me telling me when I got out of school what this was all about? You know, my life would probably be radically different. That's what I really am passionate about with this job right now. I love coaching people to rethink their thinking, like Nelson always said, to look at things from a different way.

If you are putting your retirement plans in place, do you have a contingency plan in place? It's important for us to sort of look at all angles.

It's something where you— we had a vision, we had a dream, and then and you got to go execute it.

That needs to be sort of the forefront of our minds as we're planning our financial future, our retirement, our legacy for our family, which is think long term. What we're talking about tonight is the Registered Retirement Savings Plan that's authorized under the Income Tax Act. And we're going to talk a little bit about that and we're going to talk about Stan's journey. So what we've got here to kick things off is I think a lot of us have a general idea about what an RRSP is, but I pulled this right from Canada Revenue Agency's website, and they sort of give an overview that, you know, the retirement— registered retirement savings plan, it's a retirement savings plan that you establish and that they register, and to which you or your spouse or your common-law partner can contribute. Okay, there's deductible RRSP contributions. They can be used to reduce your tax. And so as we're looking at this, just not disclaimer, but as we're looking at the way this is worded, again, coming from the CRA website, I want you to think tonight about the words and the language that CRA is using, and I want you to think about Do these words and these objectives, do they dovetail with your financial objectives over the long term? Okay, so they talk about there being deductible RSP contributions can be used to reduce your tax. It goes on to say that any income you earn in the RSP is usually exempt from tax as long as the funds remain in the plan. You generally have to pay tax when you receive payments from the plan. So when I saw this write-up, one of the things that I didn't see in here was the word deferral. Okay, tax deferral. They talk about exemption and then having to pay. The word deferral is not in there. Okay. And it's set up as a plan where, you know, the idea is to reduce your tax. These contributions are deductible, and it's used to reduce your tax. Let's keep those words in mind as we sort of walk through a presentation tonight. The question is, though, you know, what's the taxation on the other end? What does that look like? How, how are you being taxed? You know, what type of tax are you paying? There's no mention of that, um, in this little blurb. There's also no mention about capital gains tax. There's no mention about dividend tax rates or anything of the sort. I think the one thing to remember when you're contributing to an RRSP plan, and, and You know, I had an RSP. That's the way I grew up and the way I was taught. You know, you got to work hard, save for retirement, and you're going to get a tax break. And the idea is that you're going to maybe be in a lower tax bracket when you retire. That was sort of the conventional wisdom I was taught. Now, I don't know about you, Stan. Was that something that sort of you came across in your life's journey too?

Exactly, Neil. Same thing, you know. Go to school, get a good education, go find a good career after, work hard, put away for your retirement. Because in my industry where I worked, very few companies had a pension plan. That was just not something that was available.

Yeah, absolutely. And, and, you know, when you keep, when you keep reading through this, this blurb from CRA, it says, you know, you generally have to pay tax when you receive payments from the plan. That's sort of a nice way of saying, you know, CRA has a first position mortgage on your RRSP. So as we're going through tonight, I want, I want people in the audience to think, you know, who's in control here when you're contributing to RRSP? Who's in control? The CRA registers it. You're going to pay tax when you pull money out of the plan. Okay. And on top of that, you know, when you're pulling money out of your RRSP, not only do you perhaps owe tax on that, but the very institutions that you maybe you have your RRSP at, banks and financial institutions, they're required by law to— they have a withholding tax because they want to make sure that you're getting this tax right at the source. So you don't even— when you have a withdrawal, you don't even get all of it. There's this withholding tax right away. And those institutions, to my understanding, by law have to remit that straight to CRA. So again, who's in control? Now, when we think of this plan, the idea is you're going to get a break on the money you're putting in. You're going to get a tax break. So for all those gardeners and those farmers out there, it's kind of like you got a tax break on the seed that you were planting. But the government and CRA are going to show up to tax the harvest. I want to ask, so if we were to put $1 away today, how many dollars do you want that to turn into for retirement in sort of a really great scenario? How many dollars should that be? So if we've got this plan where the idea is if I can put $1 in so I can turn it into $3, $4, $5, $10, right? The plan is really you're going to take $1, get a tax break on that dollar, and then when you turn it into $5, the government's going to show up and tax the $5.

Right.

That's how this plan works. You know, does that sound like control to you, Stan?

Not at all. Sounds like a pretty— I'm not gonna— I think scam is too harsh a word, but, um, you know, the government really knew what they were doing here.

So, Stan, I got a proposition for you. What if you and I went into business together and, uh, we'll lay out a framework here where, you know, I'm going to get you to put up the capital, okay? I'm going to have you do all the work. I'm going to make you take all the risk. And when we want to wrap that business up or take profits out of it, I'm going to be the one that tells you how much I'm going to take. Would you go into business with me?

That would be a hard no, Neal.

Okay. Does this kind of sound like the RSP plan, though, Stan?

Yes, unfortunately it does. Okay.

But so this is kind of the partnership you're getting into when you put money into your RSP plan. Again, this is all coming back to control. So I've got another question. I want to know, you know, what is the general sense of where do people tend to store their retirement savings? Where do they generally put it to grow it? There's lots of different places, but I think that there might be one. Yeah. Mutual funds. Bitcoin. That's another popular one.

Yeah, absolutely. TFSAs, TFSA, REITs. Yeah.

Yeah, ETFs, real estate.

Yeah, very popular choices.

Absolutely. One of the common ones we're seeing between the ETF stock. Yeah, there you go. Stock market roller coaster is just that. You know, we see a lot of this stock market, right? And I want to be clear tonight, Stan, you know, the stock market's not good or bad. It just is. Right. And so when we're looking at it, it's important for us to sort of look at all angles. Okay, so what we've got here tonight, what you're looking at right now, is this is a, uh, a chart of the S&P 500, which is the giant American stock market. Okay, and again, it's not good or bad, but this is a, uh, a snapshot of the performance of the stock market, and this is where people want to you know, maybe house their retirement savings. This is what they're depending on. A lot of people are depending on, especially in these RSP plans, to produce that sort of nest egg for their golden years, right? And so we all know people that have money in the stock market, right? So I just wanted to show you, as you guys can see here, if we just take a snapshot from 1969 onward Okay, so this is about a 56-year window. You can see the two red boxes. So from 1969 to 1981 and again from 2001 to 2013, the market has effectively gone sideways. And, you know, there's been— to be fair, there's been some amazing returns, right? There's been some real growth there. But the question is, If you are putting your retirement plans in place, do you have a plan? And maybe your retirement— you plan to be retired for 25, 30, 40 years. Do you have a contingency plan in place so that if it involves the stock market, there's 10 to 12 years of effectively stagnation, if not large dips? Have you factored that into your plan? Because what history tells us is that certainly can happen. And it's not, you know, it's not as history shows, it's not just a year or two thing right now. We see this and we see this chart. I'm going to ask people, we can see, you know, there's some dips in this chart, right? The stock, it's not just a straight line up, it's up and down. And we see inside these two boxes, there's You know, there's, there's some major dips there. So what's the conventional wisdom that the financial gurus tell us when there's a stock market pullback? What do they tell people to do? Buy the dip, right?

On sale. Yeah.

Buy the dip.

Dollar cost average.

Yeah. Buy the dip. Do they tell you to sell during the dip? What do they tell you to do?

It's a long, long-term gain.

They tell you to hold it, right? That's maybe if, if you've got money to buy, great. But, you know, nobody really knows the bottom, but they tend to— they tell you not to sell, to hang on, right?

Well, absolutely.

One of the other beautiful features of the RRSP, Stan, as you know, is that when you get to a certain point, I believe it's around age 71, there now is minimum withdrawals. So again, CRA is in control. They set the rules and they tell you that there has to be a minimum of your portfolio coming out for you to use. You've got to extract it. It's got to come out. You're going to be taxed on it. So if you can imagine somebody who, you know, in 2000 or 2001 they were retired and then their plan was, okay, they're going to pull their portfolio bit by bit, but then there's this giant market crash over the next 2 to 3 years. They're not really in a position to sort of buy and hold and ride the wave. In fact, the own rules of the RRSP don't allow them to do that. If you think over a 10 or 12-year period, if the minimum withdrawals are 5%, and guess what, folks? They go up every year as a percentage. Over that span where the, where the market's just going sideways, that portfolio is going to have to be whittled down by 40%, 50%, possibly potentially even higher. So this very plan, which is designed to save you tax, is forcing you over time to liquidate your holdings in a sideways or downward market.

And that can be really devastating too, Neal, because when you have those dips like that, you've broken that compounding interest of what you had in there before. And to recover from something like that, it's going to take a long time. And as you mentioned, you're in your 70s or, you know, 80, let's say, you're not going to have that time with you.

Yeah. And there's something to be said about average annual returns. I know you love that, Stan.

Yeah, yeah, yeah. You can be really— you got to be really careful on that. You know, that's something that I have always learned. You know, if you're getting into equities, when you're looking at a prospectus, always make sure you're looking at the compounded annual growth rate, not an average rate of return. An average rate of return can be very misleading. You know, you can have an average rate of return of, let's say, 25%. Who wouldn't want that? An average rate of return of 25%. Would you take that, Neal?

In a heartbeat.

Yeah. Well, what if I told you you didn't make any money during that time?

Right, right. Because of the way the market can go and the crashes and the ups and the downs, right?

Yeah, absolutely.

You know, and it's really interesting when you sort of see— if you're looking at this, this chart, you know, I start to see some patterns here, Stan. You know, if I look at the two boxes, You know, they, they, if you look at the lines and the movement in the stock market, and I'm not some sort of, I don't have a crystal ball by any means here, but they tend to look a little similar. These boxes, they look like, you know, a major market crash to kick it off, recovery, and then another major market crash. And on average, then they're followed by these bull runs, you know. And it's funny because if you look at the first box, it's 1969. The start and the second box starts about 30 years later, which was 2001. Well, what's 30 years from that?

All right.

To me, that's 2030, 2031. Right. I mean, how long can this bull market go on for? And do you know, the question is, the people who are on the, on the call tonight, do they have that priced in? Are they planning to go sideways for a decade in their retirement savings? It's not good or bad. It just is, folks. And you just need to have a contingency plan. So now, separate apart from the stock market, what happens when you become an angel, right? How do these plans play out? Well, there's something called a terminal tax return. So when you pass away, if you don't have a spouse, you don't have somebody that can, you know, common-law partner or spouse that you can roll the RSP over to, the CRA considers, quote, that the annuitant, meaning you, received immediately before death an amount equal to the fair market value of all the property held in the RSP at the time. So, you know, if you think about that, what that means is that any money that's left over in that RSP comes flooding out now. On your last tax return. So if we're thinking about legacy, if you're thinking you've worked hard your whole life and you want to leave something for your family, this is how the CRA treats you. Okay. And, you know, I think we all know people who, you know, they've worked hard their whole lives or they're sort of middle class, you know, and their terminal tax return could now be their highest earning year according to the rules of CRA. Maybe they made $70,000 or $80,000 a year and they squirreled away maybe $500,000 or $1,000,000 and they used half of that. Now their terminal tax return is coming in and they're paying tax on $300,000, $400,000 worth of income, 2, 3 multiples of what they ever earned in their life. You know, I've heard sentiment in this country about people saying, well, there should be a wealth tax. When I read this, I, To me, this sounds a lot like a wealth tax. I don't know about you, Stan.

Yeah, it does. And it really treats us unfairly because, you know, because they're going to be taking so much on this type of an issue. We're not going to have what we think we had to pass on to our beneficiaries, to our families, whoever that may be. And it's very disheartening. I mean, I know I just can't stand it. I don't like it.

And, you know, just getting back to the piece of control, what we've got next here is this is a this is a snapshot, right? Because we don't know what's going to happen over time. I don't have a crystal ball to the future, but I can look at what's happened in the past. Right. And so what you're seeing in the left-hand table here is this is a snapshot. I live in Ontario, so I just grabbed these charts. These are the tax tables. Right. And so the one on the left is from about 20 years ago. You see 2006, 2005. It's got the— these are the tax brackets back then. And the one on the right over here, just get my little illustrator. The one on the right over here, obviously, that's this year. It's the combined Ontario and federal taxes. But you can see, you know, one of the things that sticks out to me here, Stan, is by my count, 20 years ago we had about 8 different tax brackets. And now, 20 years later, My count, maybe my math's off, but I think that's 11.

1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 tax brackets.

Okay. And the reason I'm pulling this up is to talk about, you know, the stock market. It's talked about the RSP. It's also to talk about that terminal tax return. So when you put money into an RSP and then you pull it out, You know, if the money that's in there, if you're investing in the stock market, generally people are investing in the stock market, they're getting dividends, they're getting capital gains, so on and so forth. When you put money into that RRSP plan, you can see generally, you know, forget about the RRSP for a second, but you can see generally over here, if you have a capital gain or dividend, the tax rates are much more favorable. Than earned income, right? And like in capital gains case, it's about half, right? In the eligible dividends, in some cases it's even less than half, right? But the minute you place your money inside that RRSP plan, you have now disqualified yourself from these more favorable tax rates. Because again, to my understanding, what's happening is that when the money comes out CRA is taxing it as earned income or other income. They're taxing it in the, in the highest form of taxation.

Okay. And that's right, Neal. That goes back to what you talked about in the slide before. You look at that bottom category, over $253,000, you're paying 53.5% tax. So you're giving away more than half of what you worked so hard for to the government. I don't know how that makes you feel, but—

Well, I'm not a big fan, Stan, but you know, that brings up another point because, you know, we see these sort of what I'll call the extra tax brackets down here, these sort of 3 or 4 extra ones where basically it's, you know, almost 50 cents on the dollar or more than 50 cents on the dollar, right? And, you know, I think some of the thought process behind that is, hey, if you're working and you're making this kind of money, you can afford to pay more in tax. But let's go back to that terminal tax return, Stan. So yeah, maybe somebody who's making $220,000 or $250,000, they've got a lot more money than maybe the average Joe, perhaps. But what about that average Joe who's been working hard and saving money their whole life and they want to send some on to the family when they pass away? You know, they're treated now, if they've got $300,000 or $400,000 left in their RRSP, they're treated with these tax brackets. Okay. 53.53 cents on the dollar for anything that's over $253,000. That, that's how CRA is treating these people who've worked and chipped away their whole lives to build a nest egg that they want to pass along to their family. You know, and so when we think about this and this situation, you know, what does the future hold? If they can do this in 20 years, what do the next 20 years look like? Right. If you're the least bit proficient at creating capital and creating, you know, prosperity the government's, the government's going to be there for you. They're going to be there hovering over your assets. What do we think the government's— do we think that in the future the government's going to be more taxes or less taxes? And Alex already beat me to it. Absolutely. Always way more.

They will take it all. More and more. Much more.

Yeah. There you go. And you know what? I mean, that's not just a gut feeling. The proof's in the pudding, isn't it, Stan?

Absolutely, Neal. Right.

I mean, I remember hearing the story of, oh, income tax is going to be a temporary thing. It's the First World War. They instituted it in 1917. And look what's happened ever since.

Mm-hmm.

Right. And I mean, this chart, this chart stops at 2017. So we can only imagine what it would look like over the last 8 years.

Exactly right.

Because as we've sort of alluded to tonight, this, this is kind of the feel, isn't it?

It sure is. It always feels like they're hovering over you and everything you have, you know.

But, uh, yeah. But you know what? If we understand the problem, then the solution's going to matter. And, and Stan, as I understand it, That's really kind of what we're here to talk about tonight is the solution. So, Stan, when we get into this a little bit, let's understand Stan Woolney, IBC practitioner. That wasn't always the case, was it?

No, Neal, it wasn't. So being born and raised in Calgary, you know, energy is the predominant industry in our province. And, you know, I gravitated towards that. I was always really good in math and in school. So You know, the way my mind worked, it really lent good to becoming an engineer. So I went down to the University of Wyoming, got my petroleum engineering degree, came back to Calgary and got a job working in the energy industry. And I got to say, I loved it. I worked in there for about 30 years and I truly enjoyed it. I started out as a field engineer. So you can see the picture of the guys there in the hard hats looking at that gauge. That's something kind of like what I was always doing, checking pipeline pressures and things like that. Drilling wells, getting them on production. So I spent the first roughly half of my career in operations. Towards the back end of my career, I got more into business development. I wanted to learn how things operate. I wanted to learn about financing and budgeting and forecasting and things like that because my end goal, you know, I'm an entrepreneur at heart. I wanted to do a startup. So that's what I got into. So hooked up with a couple of colleagues and You know, we looked around at some different assets and we found some that we liked, put together a business plan, and then we went and arranged private equity financing. So started the first company that I was a participant in back in 2011. We raised $100 million. And, you know, we started our company, started drilling wells and getting them on production. And it was a really satisfying endeavor because, you know, It's something where you— we had a vision, you had a dream, and then you get to go execute it. And then when that first well comes in and it's better than expected, I mean, the rush and the euphoria, it was really hard to beat. And, you know, towards the end of my career, because I was running companies, you know, that's kind of me in the boardroom there. And I got to say, when I first did it, I was a little naive. I thought, you know, hey, when I do this, we're going to be running things. But It's kind of the golden rule. Whoever has the gold makes the rules. And that's the shareholder, the private equity people. And they sat on the board. And I have to say, I spent probably about half my time preparing reports for the board. And it wasn't as much fun. And, you know, my heart was always in the field. So it was a great career. Some companies I worked with had some good plans where they matched for RSP savings. And, you know, I contributed to RSPs. 401(k)s for, oh, probably about close to 20 years. You know, when we had our third child, kind of stopped around then. My wife was never a huge fan, but you know, she did kind of like the small tax breaks that we used to get. But you know, we decided, well, we weren't going to do that anymore. We kind of parked our money elsewhere into other investments, and I stopped contributing around 2008, 2010. I don't have that data that far back, but roughly around then.

But this was something that initially in your career you were contributing to over a number of decades effectively.

Oh yeah, every year because, you know, I didn't have a pension plan and I knew, you know, one day I am going to retire and I'm going to have to draw somewhere for an income. I can't rely on CPP and OAS. That's just not going to be enough and, you know, have to supplement that somehow. So you have to do it by yourself. And luckily, a couple of companies I was with had some plans where they matched your contribution, but that wasn't the norm. Generally, a lot of the companies I worked for, stock options were the carrot. So that's what kind of propelled you to do more and to work better and harder. And because you wanted to really impact the growth of the company so that you could share in those rewards later.

Right. And, and so as you were building this RRSP, did you feel like, you know, if there was ever a rainy day or something came up, an emergency, that you'd be able to, you know, access it to sort of patch your family over, bail your family out if needed?

Honestly, Neal, I never thought of it that I never thought that I could do that with it, you know, because of the implications of the tax and Yeah, just like you see here. I always felt like the money was in jail. And I was kind of at the mercy of the markets. And it didn't really bother me at first when I was young because I thought, you know, I got a lot of runway ahead of me. But as I started getting older, when you have a family and you're seeing these wild swings, that's when I started getting really concerned about what was happening in there. And I couldn't really do much about it except, OK, well, let's move it out of this fund and put it over here. Try to work with an advisor when I could and when they responded to me. So that's a whole other story.

And so there must have come a point where, you know, you said you did it for a while and then I think you said you stopped contributing, I don't know, 2008, somewhere around there. What was sort of that galvanizing point for you where you said enough's enough?

Well, we just had other goals at that time. You know, at first, you know, we had— at that time we had two older children, and then, you know, we had a little blessing from God, then we had our third child that we weren't expecting, and then a fourth one. And, you know, that kind of changed things. We had to get a different home, and, you know, we sold the one that we were in and had to get a slightly larger one in an area that we wanted to live in. So that took up all of our capital, and, you know, had to redirect things into there. And as we found out with one of my boys, he had a learning disability, so he had to go to private school. So, you know, that was $20,000 after-tax money every year that we had to spend on him. So there was no way that I could afford to put in any more for RRSPs. I was investing in my family at that point.

So let me rephrase that, Stan. If circumstances were different, would you have still contributed?

Probably not, Neal, because Throughout my life, the best investment that I ever made was in our homes. We, we've bought and sold homes we built before. That is, you know, Calgary's had a pretty good real estate market for the most part, and that's where we've made our most money.

Speaking of, you know, returns and so on and so forth, what, what were those statements that were coming in the mail for your RSPs? What were those looking like?

Oh, I used to dread when I saw those statements come in the mail because my wife would open them, she'd come up and she'd look, her eyes would get this big and she'd get really mad for the most part and say, these are going down again, and throw them on the table. And, you know, I'd like, I just kind of like, well, it's a, it's a, it's not a short-term thing, honey. It's a, it's a long-term game, you know. We have to wait, you know. It's, it's long-term. Think long-term. Well, when you start getting a little bit older you don't have that runway in front of you anymore. That's when you really start to get concerned about what's going on in there.

Well, and Stan, I think we would be remiss if we did a webinar on the Infinite Banking Concept without mentioning R. Nelson Nash. And you just hit on his first golden rule, which is think long term, right? And so that needs to be sort of the forefront of our minds as we're planning our financial future, our retirement, our legacy for our families and folks. If you can't, if you've ever— well, where do we go? You should get— if you don't have this book, Becoming Your Own Banker, you need to get your hands on it. It's 93 pages. The first 2 pages are blank. This book has changed my life. As I said, I'm a recovering lawyer. Stan is a recovering engineer. This book has changed our lives. And dare I say, if you read it and you read it numerous times, it can change yours as well.

And so you're absolutely right, Neal. It did change my life. I mean, I couldn't believe the knowledge that I got from that book. And I realized how powerful it was. And when I first read that book, I actually felt really mad. I thought, why didn't I know about this before? Why wasn't there somebody like me telling me when I got out of school what this was all about? You know, my life would probably be radically different. You know, I didn't have that benefit. So, that's what I really am passionate about with this job right now. I love coaching people to rethink their thinking like Nelson always said. To look at things from a different way. And I like to pass on my knowledge and especially to some of the younger couples that I work with. They're starting out like 30 years ago from where I was. And if I can pass along something to them to make their lives better, I get a lot of fulfillment out of that.

Absolutely, Sam. But just to be clear, I mean, you started, you know, one of the things we're talking about tonight is your journey. So, we've talked about the past, and we're talking about what you did with that, what you made out of it. But to be clear here, you had started your plan involving your wife at age 55. So it's not like that's too late to start, is it?

No, not at all. And that's sometimes something I run into a lot with new prospective clients who say, well, you know, I'm too old. Well, no, you're not. You're going to have a financing need for the rest of your life. You know, it's never too old to do this unless you're over 80. You can't start a whole life policy on yourself, but you can do it on somebody in your family. But you know, it's never too late. And I'm going to go through a look at our policy that we designed to show people how it's not too late and how powerful it really is.

[Speaker:JAYSON LOWE] And so we've got listed on the screen here, you know, Stan, a couple of the objectives that you had highlighted in our discussions leading up to tonight. Maybe we just go through a couple of them. One of them here right in the middle is you talk about using policy loans to finance some of your family's needs. Like, this is coming out of your retirement nest egg. How would that work?

Well, it's like it says right there, Neil. It's actually quite simple and easy. I'm going to access a policy loan from the insurance company because they're giving me their capital while my policy keeps compounding with uninterrupted growth. For example, I've got some large expenses coming up this year. My oldest son, he's a finishing carpenter and he needs a truck for work. Well, he did one of the things that Nelson never recommends. He leased a truck. Well, he started this before we knew about Infinite Banking. And so he leased a truck because just like everybody else, my wife did this before, who has a business, you know, and who's self-employed. They want to lease a vehicle because they're going to get a little tax break on some of that lease payment that they make. So that's, you know, something that happened. So we will never do that again. Never. So now my son's truck comes up in July. Well, he has a certain buyout for it. Well, I know as a 27-year-old, he doesn't have that kind of money saved up. So he's just started his career. So what we're going to do is we are going to use this as a family banking system. So I'm going to help him out now. We're going to take out a policy loan, but we're not going to just hand it over to him. We're going to have a contract. He's going to be responsible. We're going to set up a payment schedule for him, and he has to commit to that, and he's going to pay us back. Now, the beautiful part about that— this is way different than getting financing from, let's say, a bank or an auto dealership. What if there was a month where he didn't work very much, or he took a month off for holidays, and he came to us and said, 'Hey guys, you know what? I'm a little short this month. Is it okay if I make it up the next month?' Yeah, we have the flexibility to do that, Neil. Whereas if he was with, you know, a dealership or a bank, do you think they're gonna allow him to do that?

They don't usually have a good sense of humor about that, Stan, from what I understand.

No, they don't.

And you know, it's— what you're doing, Stan, is fantastic because, you know, you're creating a legacy not just of, hey, writing a check and there's going to be some money left over for my kids, but you're creating a legacy of knowledge, right? So you're teaching your sons and your family that we're going to keep the wealth in the family. We're going to be— we're going to finance each other's, you know, needs throughout, and we're going to keep all this wealth in the family for generations to come.

Exactly, Neil. And I've got a couple teenage boys at home still and going to do the same thing for them. My soon-to-be 17-year-old, he wants a vehicle. So we're going to do the same thing for him. His policy isn't to the point where, you know, there's enough cash value to get him going. But, you know, if we do decide to get him a vehicle, we'll take out a policy loan, get him to sign a contract, you know, get him to be responsible. Can't steal the keys. You know, he's going to pay us back.

Well, you know, I'm looking at this bullet point at the very top there, Stan, and it looks like you've flipped the tables. You've turned the tables here in terms of who's in control, right? And, you know, we're going to get into a little bit further. We're going to backtrack a little bit. But Stan, when you had that money sort of in the stock market and so on and so forth, What role did volatility play in your retirement plan?

I mean, it was always a stressful situation, Neal. You just never knew where things were going to go. And I was checking my portfolio online quite a bit and I used to hate it when I'd log on and see a dip and it's like, damn it, it's down again. And there was a lot of periods, Neal, and I've got a slide here coming up that shows that sideways movement right before I started this. And it's a very disconcerting feeling. Like, I'm 61, you know, you don't want to see things like that happening at this age. You know, it's, it's a sinking feeling.

Well, you know what, let's rip the Band-Aid off here, Stan, and let's pull back the curtain and you tell me what we're looking at here.

Okay. So this is a slide of my investment portfolio that my wife and I had. So I contribute into my own RSP and a spousal RSP, and This data goes back to 2016, and that's all I could get, unfortunately, because prior to that it was with a different firm and they merged with another one. So that's as far back as it goes. So you can see here it's getting a little bit of growth up into 2017, and then the market started to kind of go down a little bit. And I think, you know, personally, my thoughts are some federal government policies that we had kind of had a little to do with that, but I won't make this into a political discussion.

We can always speculate, can't we, Stan?

Yeah. So you can see here, dip number 1 from the peak over here. Well, let me get my illustrator out. So from the peak over about here down to about here, that was a $135,000 drop. Okay. That's hard to make up because now I've broken the compounding effect from back here. Now I'm starting here, so I have to have a lot of growth to make up for that. So we're flat from that period on to here. Well, that was the pandemic, you know, that slide before showed you. I don't know when something like that's going to happen again. So another dip here. That dip was of about $91,000 in my RSP. So we can see some recovery here. That's when the government started flooding, you know, the economy with with money and dollars. So there was a lot of spending going on. You know, we get up to the peak here. And after that, you know, Central Bank and everyone figures out, uh-oh, we've put too much money into the system. We gotta tighten things up. Inflation was running outta control. You know, now you've got this dip in the market. So there's another $130,000 drop. You know, got lucky. 2024 was a really good year. And, you know, I started the same time as you did, Neal, with Ascendant. And that's where I really started to understand what infinite banking was and how to properly design a policy. And I just had to wait for a little bit of recovery. So right here at this point was right before the federal election in the US. And I remember having this conversation with my financial advisor. I said, I want to pull my equities out. I want to put them into like a cash account, you know, a high-performing cash savings account. And he looked at me, he goes, why do you want to do that? It's crazy. I said, well, I don't know what's going to happen, but whatever happens down in the US is going to affect us up here. We're tied at the hip. I thought, well, if Harris gets elected, eh, I don't have a lot of good hopes for the economy. It's going to kind of be more of the same. But then I thought, Trump might be better for the economy, but you never know. Nobody forecasted that tariff war coming. I never saw that coming either. And that's had a really bad effect on us up here and down there, in my opinion. So this drop here, that was my first withdrawal out of my RSP to start following the policy.

And you can see that the gray line down below that, that corresponds with that, right? As a withdrawal.

Yes, yes. That was a withdrawal. You know, we backdated the policy, so I got to put in 2 years worth of premium. So I withdrew about $160,000 out of my RSP that time.

And you know what, Stan, just for whatever it's worth, I'm just looking at the graph here. And, you know, one of the things that I'm sort of seeing here, if we start up here, you know, this kind of feels, dare I say, maybe it's a little bit here. Kind of feels like you were in a bit of a box here for a number of years, right? I was.

I was.

And I shouldn't be laughing. I mean, this is terrible, right? That's not how you want to live your retirement, right?

No, it wasn't. And it was always very frustrating to see things like this. And like I said, when I was younger, Neal, it didn't really bother me. And in the industry I was in, it was like that. A lot of the companies I worked for were publicly traded. So you're always trying to get that stock up. And it was like a roller coaster, you know, with commodity prices up and down. And, you know, one day your stock options are worth a lot and the next day they're worth nothing. So, you know, I've always been heavily tied into that market. And quite frankly, in through here, Neal, this period, I got tired of it.

Yeah.

Yeah.

I mean, you're doing retirement planning. Based on the outcome of a foreign government's election.

Yes.

I mean, that— where I don't know about you, but I haven't seen that on any spreadsheet of stock returns ever. And the sleepless nights that that carries with it, right?

No.

So—

and same thing here, Neal. I have no control whatsoever what the federal government's going to do. You know, look at now, what do they want to spend, a half a trillion dollars with no budget? Like, Can you guys believe that? Like, you know, everyone in the chat, like, what do you guys think about that? This— there's going to be more money flooding the market. Like, what's going to happen, you know? Uh, inflation again. Like, it's something that we really can't control.

Well, I remember, Stan, you know, in this period here, right? Mm-hmm. I mean, it was like must-see TV with the next interest rate announcement. Are they going to cut? Are they going to put it higher? What's happening with interest rates? And then the market would gyrate, right? So at some point though here, Stan, you shifted gears.

Yes.

Right. And that didn't start with reallocating resources here or there. I'm assuming it started between your ears.

Oh, it did, Neal. It's when I first, like I mentioned before, when I first heard about infinite banking, I just vividly remember how mad I felt that I didn't know about this before, you know, that there was a better way of doing things. And it's like you say here, rethink your thinking on retirement. I knew there was a better way, but I wasn't quite sure how to do it until, you know, I got into Ascendant and I really got a strong grasp of this.

Well, and you know, that's Nelson's fifth golden rule, rethink your thinking, right? So, We've pulled back the curtain on your conventional plan. Now let's pull back the curtain on what you're doing now and the solution that you've put in place for your family. And before I pull that back, just let's just give me the 2, the 3 or 4 top things you were hoping to achieve with this plan.

Stan, for us, it was the safety and the security, the safety, security and guarantee. That I didn't have to worry about volatility. Like, maybe go back to that slide for a sec, Neil, with the, uh, the building on it. And the— we don't know what's going to happen out there geopolitically or health-wise. I mean, I think you had this before, Neil, like, do we think the world is going to be a more stable place or a less stable place? You know, you just don't know what's going to happen.

Triple L. Yeah.

Yeah. Like, you know, right now I'm a bit of a political junkie and, you know, I've been watching very closely what's going on in the States. And, you know, what if Trump decides to go drop that MOP on that reactor in Iran? What's going to happen? Well, they're probably going to disrupt, you know, the oil shipping routes. And, you know, we're probably going to get a spike in oil. And, you know, it's just going to wreak havoc on the world. And You know, it's, it's out of our control, but it's going to affect the markets, you know? Yeah. If you have your savings tied up in there, you're at the mercy of that. And for me, very disconcerting.

So you took action.

I do.

Let's talk about that. So let's, let's talk about the plan that you put in place. And, and if we'll jump to this slide, take us through this here. Who is— this is a dividend-paying whole life insurance policy plan. We call these plans an insured retirement plan, folks. The best way for you to talk about this and your specific situation is to get in touch with an advisor. We're going to put in the chat box where you can text and how you can get in touch with one of our advisors. This is Stan's plan, okay? It's not your plan. We don't know your circumstances. We'd love to learn them. We'd love to help you with what Stan's about to go through tonight. It's called an insured retirement plan. Stan, if you can sort of walk us through what you were doing here.

Sure. I'll get to some of the assumptions on the follow-up slide, on the summary slide. But this is basically a peek under the hood on what my preferred retirement solution would look like. Now, I just want to let everyone know, typically, you know, when we're setting up a family banking system, we like to set up the parents on top. You know, that would be my wife and I. However, in this case, we didn't do that. I put all the chips towards the middle, towards my wife. Reason being is, you know, I was diagnosed back with prostate cancer back in 2017, and I had surgery afterwards. Very successful. I caught it really early, so I'm luckily, um, very lucky to be here still with you guys. So for all you guys out there that don't get your PSA levels checked every year, please do so. It can save your life. So as I mentioned before, Neal, I took my RSP portfolio and I told my advisor, get me out of the equities. I don't want that roller coaster anymore. Put it to somewhere safe. You know, I'm okay with a 3% rate of return. I don't care about that because I knew that I wanted to fund my policy for this. So because of my cancer history, I thought, you know what, there's a chance I could probably get underwritten, but I don't want to wait. I want to do it right now. I know my wife is healthy. She's going to get a policy contract. So that's what we did. Okay. So I knew how much capital was in there. So I kind of calculated, I thought, you know, roughly a 10-year period I wanted to capitalize my system. So that's what this here, right here, this column here. Yearly premium and deposit. This is the capitalization phase. Okay.

But you went a little bit longer here, Stan. It looks like you went about 14 years as your plan, correct?

Yeah. Well, when I first did it, Neal, I was very conservative. I took what amount I had left and I didn't add on any compounding on it. Okay. That's going to happen. So I kind of revised it and this is probably more closely to what's going to happen. Okay. So the way we designed her policy is we can just about put in $50,000 a year to capitalize our system. So, you know, people out there that are familiar, there's the flexible portion and there's the base premium that has to be paid to keep it in force. And, you know, I designed that base so that even going forward, you know, it could be sustainable, but I wanted to do something where it would be sustainable on its own and I wouldn't have to put another nickel in after I depleted my RSP portfolio. 'Cause I get a lot of questions on that when I'm talking to prospective clients. They want to know, well, when can I stop doing this? I can't pay to age 100 'cause I see these things go to age 100. So I wanted to mimic that.

[Speaker:JAYSON LOWE] And just to be clear here, Stan, we're simply changing the location of your asset. There's not extra money that you've got to sort of come up with and put in or anything. We're simply changing the location of where you're warehousing your wealth. Would that be accurate?

That is 100% correct, Neal. So you can see here, this is the capitalization phase. So you can see I'm putting in just under $50,000 a year for the first 10 years. And you'll notice afterwards it dropped a little bit. Reason it dropped is we had a term rider on there to give us more capacity to put capital in the system. That term rider dropped off, so it's a little bit less for a few years. And then the last year you can see it's $39,000 because that's what I projected was left after those first 13 years.

Okay. It's just to get clear the balance kind of thing.

Exactly.

Perfect.

Okay. And so one thing I also wanted to point out, because, you know, I get a lot of questions on, you know, is this thing going to be sustainable? And yes is the short answer. You can see all the way through here This column, there's no yearly premium or EDO payments going in here, nothing. So from this point on, there's more than enough dividend in here to pay the base premium and to buy some paid-up additions to keep fueling this system. And that's the awesome part about this. I don't have to do anything. I can, but I don't. And I get that question asked to me a lot, like, Stan, I'm going to be 75. Like, How am I going to be coming up with $25,000? Well, in this scenario, like I'm showing you, you don't have to, you know, work with your coach and see what your situation is. And, you know, we'll see what we can design for you. But there's always that point in time where your dividends will be able to take care of your premiums. But like we always say, don't stop paying premiums. We're not encouraging that. You know, we want you to keep doing it because as this policy grows over time and the longer you're in it, the compounding effect is even greater. So if you can keep contributing, keep contributing as long as you can.

So, Stan, just going back to that point about, oh yeah, how am I going to come up with this money when I'm 75? You know, that to me feels a lot like somebody else is in control. But you're telling me we build these plans, these insured retirement plans with these policies that have a lot of flexibility in them and they can sort of be tailored around a family situation.

Exactly, Neal. Exactly. And that's what we do with all of our prospective clients when we're putting something together for them. We think of us as like a tailor. We're going to measure you up for a suit and it's going to fit you.

Perfect. Perfect. Okay, so that's what you're contributing.

Yep.

Now, come on, it's for your golden years, so don't hold out on us.

Okay, so now passive income stream time. So this is kind of after my wife turns 65, we're going to start drawing out a passive income stream. So what we'll do is we'll collateralize the policy. That means we'll take it to a third party and be able to draw a passive income stream. So in this particular scenario, this is the amount I selected, was about $35,000 a year. Reason I chose that is, you know, we do have other sources of income. There's going to be CPP, OAS, some rental income, and you know, I could have taken up more, but you know, something that's very, very important to me is my family. You know, I want to make sure that there's something left for them, Neil. I don't know about you, you have your, your kids, younger, your kids are about the same age as my younger kids. Like, going forward, you know, it's going to be so much harder for them with what's happened here. Housing prices have gone through the roof, you know, groceries, utilities, everything. So, you know, because we were more fortunate during the era that we grew up to be able to accumulate some wealth, I want to do something for them. I want to be able to pass something along to them. You know, this is something that's near and dear to me, that when I go, I want to make sure that my family is going to get as much as possible. So that is kind of some of the rationale behind this.

And to be fair, Stan, though, just to balance that, that, that's not at the at the expense of you enjoying your retirement.

No.

Would I be fair in saying that?

Yeah. And that's the thing you'll notice here. You know, I want to just illustrate something here. So right here, as you highlighted, when we start taking out passive income here, look what happens to the total death benefit in this column here. Oops. I don't know why it keeps clicking off on me. Sorry. You know, we're starting at, you know, $1.49 million. Of death benefit. And I ran this out to age 91. Yes, I know the average lifespan of a female in Canada is 81, but my wife is quite healthy and she's had some longevity in her family. So I just picked 91 just for numbers. Look what happens. The death benefit has climbed to $2.9 million.

That's like a doubling.

Yeah, it's that compounding growth. It's uninterrupted even though I've got this passive income stream. And this is the cash surrender value. That's what this bank loan amount is based off of. The cash surrender value is just slightly less than the cash value of the policy. But look what's happening here, Neal. You know where it's—

It continues to grow, it looks like to me. And this is a, you know, it's always compared to what you used to do. So if you were drawing down on your RRSP, and digging into the capital, can all of that RSP compound like the original amount?

No, you're going to break it. That's the frustrating part.

I always say this to people I speak to, Stan. You know, I feel like these government plans are designed to be built up and torn apart. RSP, RRSP, you build them up, you tear them apart. There's nothing left over. There's nothing left over for anyone. Other than maybe the government. That's the sense I get with these government plans. Whereas this plan, to me, if you keep it in the family and it allows you to think long term and build that family legacy.

Yeah, you're, you're so right, Neal. And that's something that I never thought of before. You know, I thought I was doing something good, putting away money, and it's always good to put away money. Don't get me wrong. You know, like you said, Neal, RSPs aren't good and they're not bad. They just are. Okay. Yeah. And something we never think about, you know, you get these statements and you look, wow, look at this. I've got almost $1 million in here. Wow, this is awesome. Do you? No, you don't. As you said, the government is first in line. And I think a lot of people don't think about that.

Yeah. How much of it actually belongs to you? Exactly right. That's something to consider. Now, in these figures here, Stan, how much actually belongs to you?

All of it. All of it belongs to me and I'm in control of it.

Nobody else. And, you know, Stan, just before we flip over to the next slide, because I know there's going to be a bit of a summary on the next slide, you know, like I said, stock market isn't good or bad. It just is, you know, and we've got a lot of people with an investment mind on the call tonight. Right. So if we were to just sort of take a look here, you know, let's say when your wife's 65, and this is the cash surrender value. I mean, that's where she can collateralize it. Say there's some great investment that comes across her desk. Is there anything stopping her from leveraging the policy and going out and getting that investment? Maybe it's a 2, 3, 5, 10-year window or horizon. Is anything preventing her from doing that?

Not at all.

If done properly, can she avoid any sort of taxation?

Yes, yes, absolutely, Neal. And that's, that's the beautiful part about this. And that's why I like this so much, is it puts you in control and it gets the government out of your kitchen. I mean, I'm a libertarian at heart and I want to have control and I don't want them telling me what to do and I don't want them sitting at my future retirement with a fork and knife getting ready to carve it all up.

Well, I appreciate that, Stan. What we're going to do here is we're going to just do a bit of a summary here. And then we're going to get to the questions in a moment, just out of respect for everybody's time tonight.

Okay. So just to kind of summarize what I was talking about before. So here, you know, this is the IBC strategy. So the summary of all the capital in $681,346, and that's after-tax dollars. You know, I used a 30% tax rate because that's what the withholding tax was. That's why I had last year. And that's, you know, I didn't have to pay any additional. So I'm pretty comfortable with that number. The passive—

So, Stan, Stan, just to clarify here, that's you just changing the location of your wealth. You're moving it out of the RSP, you're paying, you're going through the tax toll road, you're taking the remainder amount, putting it into your policy. Do I have that right?

Yeah, that's right. And while, while the, the remaining RSP balance is there, it's compounding at 3% a year. Okay.

Right. In a very sort of— you want to make sure it was there.

Yes, exactly. So for all those years that we're drawing out that $35,111, this is what the total passive income was out. That's tax-free. Okay. Right now, after my lovely wife passes away and I'll probably be long gone before that, there's going to be something to give to my family. That's what I really like about this. And it's Neil, it's tax-free.

Right.

You know, it doesn't go through probate, so you're not losing any points off of that. And it's private. It's creditor-proof because it's going to my family. So, it's just such an efficient way of transferring the wealth that we've built up to be able to give it to our kids. You know, and I know that's a lot of the people that we work with, that's very important and near and dear to them. And it is to me because I care about my family so much. So with this strategy, my total out with the passive income and the legacy transfer calculates out to, you know, $1.66 million. So I thought, okay, I'm going to just kind of compare this to what I would have done if I never knew about infinite banking. So same thing, I would have, you know, I would have put my money into that low-risk kind of guaranteed environment no matter if I was doing infinite banking or not, because I was not going to go through this roller coaster anymore. I was done. I was off of it. I lived that throughout my career and throughout my savings.

You didn't want a 12-year box of sideways up and downs?

No. And I didn't want it like a $100,000 drop from one year to the next. I mean, that could be devastating for somebody's future. So, didn't want that. So, same thing. I compounded that and it calculated out to just under, you know, $1.2 million. So same passive income out, 'cause I wanted to compare apples to apples. And so at the end of the day, there was about, you know, $614,000 roughly left in the RRSP, Neal.

Now— Right, still left inside of it.

Left inside of it. I'm not there, my wife is there. Well, it has to go to our children, our beneficiaries. Well, you showed that table. You know, here in Alberta right now, it's like 48%, that terminal tax rate on an income that high.

So the top— the top. Yeah, the top rate. Yeah.

So they only get an amount that's about $305,000. So total out was about $1.15 million.

So this strategy— sorry, go ahead.

No, you don't have to be a genius to see that's a pretty big difference. And I'm in control of this. And I get to use this, Neil. I get to use my cash value in the policy now to finance things in my life that I need, like my son's truck. My wife needs a new vehicle at the end of the year. You know, we need to do some home renovations. Now I'm going to be self-financing. I don't have to go into line of credit, pay interest to the bank. I'm directing it back into the system that I co-own as a policyholder with that mutually owned company.

Like a pretty stress-free way of life there, Stan. And the other thing too, you and I had talked about this before the webinar tonight. This was just the way you designed it. So, you know, I know we're comparing— you made a point of having the same amount of passive income, but for those people who maybe want to live it up a little bit more during retirement and maybe leave a smaller amount to the family moving forward, in this plan here you can absolutely do that. You could end up taking more in terms of policy loans for those golden years because you have such a cushion with the death benefit. Am I right in saying that, Stan?

Yeah, absolutely, Neal. 100%. You know, I want you to go back to that previous slide for a second. Sure.

Yeah, absolutely.

And this is kind of even after putting this together, you know, rethink your thinking. And thanks to my colleague Richard Canfield, He got me even to think about this in a different way, that passive income stream. So I looked at this and I thought, I've got 4 kids, you know, 12 years from now, my youngest 2, they'll be in the workforce, they're going to be working. Hopefully they've got good jobs and that. Now, with respect to Family Banking, I can go to them and say, hey guys, how would you like to fund our passive income stream? Okay. You guys each kick in about $750 a month or whatever the number that we calculate. So instead of maybe getting an inheritance of, let's say, just over $200,000 based on that, you know, if they funded our passive income stream, there could be $2.9 million that they're divvying up. So for every dollar that they put in, Neil, they might get 3 out at the back end. All tax-free. So another option.

So Stan, I'm just going to— you and I are very familiar with this table, but just for the benefit of the audience, I'm just going to slow it down a little bit here, if you're okay with this.

Yeah, please.

So what you're saying is, you know, you and your wife want to get $35,000 a year.

Yeah.

Okay. And this column down here is— this is the loan that's growing because you're not paying back any of those policy loans. Is that correct?

That's correct, Neil.

So what you're saying is instead of taking loans from the policy, if your kids, you know, made an investment and supplemented your retirement income and left this policy so that there wasn't a $2,000,000 loan when your wife is 91, they don't have that loan anymore, which means they have access now to the full death benefit rather than just the $800,000 remaining. That's a swing of an extra $2.1 million that your family is going to enjoy. So they put in— they end up putting in to you guys $842,000, and in return they're going to get $2.1 million more.

Exactly.

I walked through that, right?

You did. And there's even more. So let's say they're like, you know, this looks great. I'm putting in $1 and I'm going to get $3 more out. Can we put more in? Yes. Look here, I've got no premiums and EDO payments coming through this column here. They could pay my premiums and put EDO in. Think of what that number— instead of 2.9, what it could be. It could be significantly more. So you talk about family banking and creating, you know, wealth for your family. I can't think of another tool that could do this.

[Speaker:STEVE] Well, when you just look at, if I look at these sort of last 3 years where you were contributing, you'd see how the death benefit's really kind of riding up there, right? And in fact, it kind of drops. It starts dropping down because you're taking loans. That's the net estate value. I should be looking over here. Yeah, sorry. If we look right here, you see how it's growing. Yeah, right. It's growing significantly. Right. And then the growth— the growth slows down a little bit, but it's still going up by $30,000 versus almost $100,000 here. Right. If the reason it slows down is because there's a big donut over here.

That's right.

So they can change that. And you know what's coming up for me here, Stan, is flexibility and infinite. There's so many different ways that you can approach this and you can tailor a system around your particular needs. And I think that's what, you know, we're driving at here is anybody who's on the call who wants to set one of these up, you know, let's, you know, don't be afraid. Let's schedule a call, scan the QR code here or text LIVE to the number that's on the screen and we can walk you through your scenario and how it will work best for your family. This is definitely not a one-size-fits-all thing. It's something that you need to be coached on. You need a good coach, just like anything in life, right?

So, no, just, Neil, after I found out about infinite banking, I really realized that I can do more with what I have. To really summarize it neatly, that's what this is all about. I can do more with what I have and we're in control of it. And I don't have to worry about external geopolitical or market factors. It's all in my system, private, and it's just for us. And to me, I'm living a much more stress-free and peaceful life now.

You took the words right out of Nelson Nash's mouth there, Stan.

That's true.

Do we think that in the future the government's going to need more taxes or less taxes? How are you being taxed? The plan is really you're going to take $1, get a tax break on that dollar, and then when you turn it into $5, the government's going to show up and tax the $5. But you know what, if we understand the problem