Eroding Factors

The eroding factors of your financial life – if you don’t have the leverage tool of a permanent life insurance policy to be able to use later in life, how will you respond once you have been affected by the eroding factors that exist for you and for me.  Seldom do people talk about these eroding factors. 

  1. Inflation – I remember my very first job, full time 48 hours per week annually.  I was making only $10,800 per year.  Simply through inflation I made more money, but likewise through inflation, the cost of automobiles went up.  The cost of heating bills went up.  The cost of electric bills went up.  Everything continues to go up, and a lot of people forget to think that inflation continues upon retirement.  It does not stop.  That inflation automobile is still going down the interstate at 70 miles per hour.
  2. Taxation -  We probably, over the course of the last 30-40 years, have been in some of the lowest tax rates during the history of the United States.  When I take a look at the amount of money that the Federal Government is spending at this point in time, and I see how that continues to increase trillions and trillions and trillions of dollars, I have to think, how long will taxes stay the way that they are?  If fact, when I ask people – do you believe that taxes in the future will be going up, going down, or staying the same?  What do you think the answer is that they give me?  Seldom is it ever the same.  Seldom is it ever down.
  3. Plan Obsolescence – There are certain things in our life that we are just not going to use any longer, so have to buy the newest and the best.  When was the last time you used a VHS tape recorder, for anything, whether to record or to play.  In fact, often times people don’t even use DVD’s any longer.  Now is the new and increased cost of being able to stream things online.  It is plan obsolescence, which dovetails into technology changes. 
  4. Technology Changes - I remember when I was a youngster, we didn’t have cell phones so that was an expense we never needed to incur.  Likewise, no one had a personal computer.  Now we have personal computers.  We have tablets.  We have smart phones.  We have all these technological changes, and just because we have all the fancy gizmos today, just think what is coming down the road.  Do you want to be able to have the opportunity to buy those things, use those things, embrace those new technologies?  They are coming, and we don’t even know what they are yet.  So that’s an eroding factor of our financial life.
  5. Propensity to Consume – The increased standard of living we all want.  I think of the modest homes that we probably grew up in, the modest automobiles, the modest vacations, when you would take the entire family, like the Griswold’s, and you would pack the car and travel across country.  Now, it’s seldom that anyone crosses the country by automobile, it’s by plane, and it’s not just in the United States, it’s worldwide because we want an opportunity to increase our standard of living.  Also, we have a propensity to consume our savings.  A report out by Kiplinger, just this last week, stated because of the Covid-19 virus, and because of the recession, a large amount of people took money out of their 401(k)’s because they had to consume their savings just for living expenses.  Had they had an opportunity fund, an emergency fund, they could have left those retirement monies where they were, and now that money won’t be there when they need it for their old age.   
  6. Lifestyle changes - Do we wear the same clothes that we wore 10 years ago, drive the same automobile that we had 10 years ago?  There are all these changes that are happening.  Why would somebody remodel their bathrooms, their kitchens, and home?  It’s because they want the latest style – new and improved.  This is why often times people get rid of old automobiles, not necessarily because they are breaking down, but because they want a new style change.  Same thing with clothes.  Every single year we buy a new wardrobe.  It’s because we want to take advantage of style changes.

So, there are these eroding factors that happen in our life:  inflation, taxation, plan obsolescence, technology changes, propensity to consume, propensity to consume savings, and lifestyle changes.  What are you doing?  How are you formulating your life to take advantage of working against these eroding factors?  And what is the safety net that you have in place? These can be taken care of by the proper leveraging, by the proper safe assets that are hidden inside of a permanent whole life insurance policy.  Often times people have not been shown how to unlock the opportunities that are stored inside.

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