Pensions Are Back!


Pensions have just about disappeared. However, the benefits of a pension are still attainable.

Ask any physician if he or she would like to have a lifetime tax-free pension, what do you think they would say? Of course they would say yes, followed by, “no one offers pensions anymore, they cost too much.”

Years ago, before the 401(k) and the IRA, there were two ways most people saved for retirement: pensions and permanent life insurance policies. Pensions have just about disappeared. It was so long ago, today most people have no idea permanent life insurance policies can be used as retirement savings vehicles. So why did pensions disappear? It was simply cheaper for companies to offer a 401(k) or 403(b) plan instead of a pension plan. At the time it seemed like a good idea. Here’s the problem, the outcome of this 40-year experiment is the average 401(k), or 403(b), or IRA runs out of money in about 12 to 14 years. To make matters worse, we are living longer and people are running out of money in retirement. We all know someone who ran out of money in retirement, and it was not a pretty sight. Many of us also know someone who enjoyed living out their retirement years on a lifetime pension.

The good news is pensions are back, because there are now better ways to fund them. Moreover, the new pensions are more cost effective than the 401(k) or 403(b) plans. The news gets even better, because the new pensions mitigate the limits and restrictions of the qualified plans.

You might be thinking, how is this possible? It’s done by the combining the power of financial leverage otherwise known as bank financing, and insurance. It's done the same way you use financing to buy a car, purchase a home or for that matter, any large financial undertaking.

Banks participate, because the plan itself collateralizes the loan, making it the safest kind of loan a bank can make. Insurance companies provide permanent insurance policies as the retirement savings vehicle. Combined, it creates a fully funded pension plan that provides you with guaranteed lifetime income that is tax-free.

If you have questions send me an email to Check out my website at, and make sure you come back here next week to Physicians Money Digest for another edition of The Alemian File.

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