Ditch the Outdated Retirement System and Protect Your Savings
Switch to a Swiss-Style Retirement Plan to Maximize Gains
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Reso Your Finances combines aspects of various retirement plans to help clients generate wealth and stability.
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The current retirement system in the U.S. relies heavily on individual investment accounts like 401(k)s and IRAs. These accounts are subject to market volatility, which can significantly impact the income they provide. Many retirees face the risk of insufficient income and are affected by both positive and negative market fluctuations.
Reso Your Finances looks to improve upon the current system, allowing you to achieve prosperity, pay back debts faster, and generate wealth quicker and longer.
“The company’s purpose is to combine aspects of finance that never have been before,” says Reso Your Finances President, Vincent Emery. “My partners and I combine the best attributes of various retirement systems to help retirees and those soon to be retired double their retirement income.
A brief History of the Retirement System, particularly the Shift to 401(k) Plans
In the 1980s, U.S. employers started moving away from traditional pension plans due to changes in corporate structures, the complexity of managing pension funds, and the desire to reduce costs and transfer investment risk to employees. The 1978 Revenue Act allowed employees to make voluntary, pre-tax contributions to retirement plans, which led to the popularity of 401(k) plans. These plans transferred the responsibility of retirement savings to employees and minimized employers’ long-term financial obligations.
There are two primary issues. First, market losses can significantly impact retirement accounts. Since these accounts are dependent on financial market fluctuations, a significant market downturn can take a long time to recover from, which is problematic if retirement is approaching or already underway. “For example, some of our customers lost 20% of their portfolio in 2022, just before retirement”.
Second, the commonly recommended annualized withdrawal rate of 4%, known as the Safe Withdrawal Rate (SWR), may not provide sufficient income. This rule suggests withdrawing 4% of your retirement portfolio in the first year and adjusting that amount for inflation each subsequent year. However, this rate assumes favorable market conditions and a balanced portfolio, which might not always be the case.
For example, if you withdraw $40,000 from a $1 million portfolio in the first year and inflation is 2%, the rule suggests you withdraw $40,800 in the second year. The SWR also considers historical market performance, including downturns and recessions, but it does not protect against future market conditions being worse than historically observed. Therefore, your retirement account is at risk due to inadequate protection and low returns.
Now, retirement accounts fluctuate based on the volatility of the stock market, including a financial crisis. Market losses can contribute to significant blows to your retirement accounts, resulting in a considerable amount of time for investment portfolios to recover. Events like the ones two years ago can severely impact anyone who’s approaching retirement or already underway, as there may not be enough time to recoup these losses.
What can we learn from the Swiss Pension System
The Swiss pension system is structured to provide greater stability and higher payout rates. It consists of three pillars: social security, occupational pension plans managed by employers (IRA, 401k), and voluntary private savings. The second pillar, or occupational pension plan, includes market downside protection mechanisms, which safeguard assets. The payout rate for the Swiss second pillar is determined by the conversion rate, which is currently at a minimum of 6.8%. This means that for every $100,000 of accumulated retirement savings, a retiree would receive a minimum annual pension of $6,800.
On 22 September 2024, Swiss voters overwhelmingly rejected a pension reform, opting to keep the minimum guaranteed payout rate at 6.8%.
Emery states, “An example of this is my mother who lives in Switzerland, is 80 years old, and earns $2,000/month from Swiss Social Security. Her pension fund offers a 7.5% payout rate: $4,200/month. If she had a retirement investment account similar to the U.S. (401(k), IRA) with a 4% withdrawal rate, she would earn $2,240/month. Over ten years, this would accumulate to an income loss of $235,200.”
Reso Your Finances looks to address these concerns by converting your current retirement situation into a Swiss-style system, complete with a death benefit (cash value) for your beneficiaries, through a rollover or transfer.
Emery states, “It seems too good to be true, but this is the reality. My role involved identifying the best insurance carriers with a long-standing culture of investment management, dating back to the 19th century when pensions were first established. I carefully selected robust partners, some of which have over 100 years of experience. These companies are highly reliable and experienced in their field.” If you’re retired, you can transfer your retirement account savings into one of our institutions’ accounts. If you’re still employed, you have the option to do a full, partial, or in-service (if over 59 1/2 years old) rollover of your 401(k) to an IRA.
For more information on how to redirect your current retirement savings to maximize gains, contact Reso Your Finances today. 1-855-678-RESO (7376) www.resoyourfinances.com