Assessing the wisdom of conventional financial wisdom

Do-not-gamble-retirement-savings-Schlappi-Financial

Is it really best to buy term and invest the rest?

By BRUCE SCHLAPPI

You don't have to look far to find big names and heavy hitters who say, "Buy term life and invest the rest in mutual funds."

Dave Ramsey, Suze Orman and others shout this mantra from the rooftops. And they have a right to their opinion. But there is more than one side to every story, particularly when it comes to the complexity of financial planning.

(A quick note: Instead of saying "buy term and invest the rest" again and again, I'm creating a new acronym: BTAITR).

Then there is the matter of consumer (saver) behavior. Just because someone consents to the idea of BTAITR doesn't mean they'll actually do it.

Consultant Pamela Yellen disagrees with the BTAITR approach and she's gotten into several spirited debates. She recently wrote that most people who buy term never invest "the rest" as they would with a whole life insurance policy. 

“People don’t buy term and invest the difference. They most likely rent the term, lapse it and spend the difference.”
— Professor David Babbel, Journal of Financial Services Professionals, The Wharton School of the University of Pennsylvania

However, even if everyone followed the BTAITR policy to the penny, we believe there is a better, safe-money alternative in whole life insurance and annuities.

How are market funds working for retirees today? If your retirement is in high-risk funds, you risk losing not only gains, but your principle. In other words, you could leave with less than you started.

Are you willing to continually risk your retirement?

We believe there is a better way.

Bruce Schlappi is the president of Schlappi Financial Group, a Kansas City-based firm specializing in whole life insurance and annuities-based retirement savings plans.