The U.S. Congress sets a federal budget every year in the trillions of dollars. Very few people can comprehend how much money that is, so we created a breakdown of federal spending in simple terms. Let’s put the 2011 federal budget into perspective:
- U.S. Income: $2,170,000,000,000
- Federal Budget: $3,820,000,000,000
- New Debt: $ 1,650,000,000,000
- National Debt: $14,271,000,000,000
- Recent Budget Cut: $ 38,500,000,000 (about 1% of the budget)
It helps to think about these numbers in terms that we relate to. Let’s remove eight zeros from these numbers and pretend this is a household budget for the Jones family.
- Jones Family Total Annual Income: $21,700
- Jones Family Total Annual Spending: $38,200
- Jones Family New Credit Card Debt: $16,500
- Jones Family Credit Card Balance: $142,710
- Jones Family Annual Budget Cuts: $385
In effect, last month Congress (or in this example the Jones’), had a kitchen table family meeting and agreed to cut $385 from its annual budget. What family in their right mind would cut $385 to solve $16,500 in deficit spending?!? It is a start, although hardly a solution.
After years of this, the Jones family has $142,710 of credit card debt (the equivalent of the national debt). You’d hope the Jones family recognizes and addresses this situation, but they don’t. Neither does Congress. They simply move forward and function under $142k credit card debt and $21k annual income! Maybe it will just go away. Or maybe we can all kick the can and let the next generation pay for it…
To effect budget change, we need to change the job description of our representatives and give Congress new marching orders. It is awfully hard (but not impossible) to reverse course and tell the government to stop borrowing money from our children and spending it now. In effect, what we have is a reverse mortgage on the country. The problem is that voters have become addicted to the money. Moreover, the American voters are still in the denial stage, and do not want to face the possibility of going into rehab.
I hope you share these numbers (and real world analogy) with your clients. Awareness and acceptance are our first steps to a solution…
You likely saw the United States recently hit its Federal debt ceiling of $14.2 trillion. At nearly the same time the United States also had its credit outlook downgraded by Standard & Poor’s from positive to negative, citing the fact that authorities have not made clear how they’ll tackle long-term fiscal pressures. News to virtually no one, the economic recovery in our country will not be quick one.
What does all of this mean to you as an advisor, and more importantly, what does it mean to your clients? Clients are more concerned than ever before about running out of money during retirement. News like the above and countless other daily stories have them scared. In fact, according to a recent Associated Press and LifeGoesStrong.com poll, nearly half of Baby Boomers near retirement fear they can’t afford it. (CLICK HERE for the entire article.) They might run out of money using today’s numbers! But pile on top of that inflation and leaving a meaningful benefit to loved ones and it looks dire.
To help address these issues, I’m providing two presentations specifically built to ease your client’s top three financial concerns:
1) Outliving retirement income
2) Safeguarding against inflation
3) Providing a death benefit to heirs
Presentation #1– This illustrates your prospects that need income with inflation protection first, and secondarily will leave money to beneficiaries (assuming a 6% payout percentage for life).
Presentation #2– This illustrates your prospects that have equal concerns of needing lifetime income but also want to leave money to loved ones (guaranteeing a 4.5% payout percentage for life).
I distinctly recall an advisor I consult saying, “Your potential clients are coming to you for help solving a problem. They don’t care what product gets them there.” Find that problem, agitate it, make it real to them and provide sound solutions to help clients enjoy the retirement they’ve always envisioned. They’re in more uncertain waters than ever before, and you have the solutions they need!
Make it a great week!
“Borrow Like There’s No Tomorrow”
Talk about a humorous piece for seminars, client events and appointments. Use this…people will love it!!!
Find a way to incorporate (especially the videos) these items from (mock) 2012 Presidential Candidate ~ Hugh Jidette.
HUGH JIDETTE’S BIO
HUGH JIDETTE “ON THE ISSUES”
HUGH JIDETTE – 5 CAMPAIGN VIDEOS
Work smart, hard and let’s make the 1st quarter wildly successful. Clients need your help now more than ever!!!