Myths vs Facts: Debunking old wives’ tales and financial myths

Myths vs Facts: Debunking old wives’ tales and financial myths

While growing up, you probably heard many of the same old wives’ tales I did: if you keep making that face, it will freeze that way. Coffee stunts your growth (or makes hair grow on your chest). You can’t go swimming for 30 minutes after eating, or you will get cramps and drown. We’ve all heard them, and some, you may still believe. I’d like to dispel a few common financial myths.

Don’t find yourself in a financial horror story

Don’t find yourself in a financial horror story

Like all scary stories, mine opens peacefully. You and your spouse are enjoying your retirement. Your health is good, and you are doing all the things you dreamed of together. Then, suddenly and tragically, you lose your spouse. As you struggle to deal with your grief, the next trauma comes. You discover that the documents you signed several years ago when your spouse retired don’t have a loophole, and in addition to losing your spouse, you’ve also lost a substantial portion of your income.

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What if you could use the magic of compound interest for decades (i.e., a child policy), yet never pay taxes above basis because you take distributions as a loan?

It is not deemed as income, is not subject to required minimum distributions, and will not affect taxation on social security if in a life insurance policy. Death benefits are tax-free as well.

As a parent or grandparent, you can leave a legacy by using the magic of compound interest.