Death on the Descent: Mount Everest and Retirement Accounts

January 5, 2014

Pretend for a moment that you’re preparing to go to work. You’ve completed your morning routine and are just a few moments away from departing for the office but this particular morning is a little different. You have the means to get yourself to the office but not to return home. You hear the conversation run through your mind: “How are you going to get home? You don’t have access to public transportation. You don’t have money for a taxi. Your coworkers are not able to bring you back. There are no friends or acquaintances that can pick you up. You have no money and just enough gas to get you there. What in the world are you going to do?”

Would you even travel to the grocery store without the ability to return home? How about a vacation, would you plan a trip without specific knowledge of your return?

Plan my descent down Mt. Everest? No, I’ll just wing it

The answer is simple to these somewhat rhetorical questions; however, I wonder if those who set out to climb Mount Everest spent any time developing a plan to get them off the mountain? I would be willing to place a wager that not one single expedition up Mount Everest, let alone any mountain, has ever failed to plan a way back down. Not once. Why? Because summiting the mountain is only half of the journey. Unfortunately, the descent down Mount Everest is the most dangerous.

In a story from Scientific American back in December 2008, 56% of those who have died on Everest have died during their descent after summiting. Another 17% died after turning back (i.e. descending). That’s a total of 73%. Only 15% died on their way up or before leaving their final camp. The remaining died through various accidents like avalanches and falling ice at lower altitudes.

The descent is by far the very most dangerous, treacherous, threatening, unsafe, formidable, perilous and risky phase of the Everest exhibition. If there is no plan in place for the descent then failure surely awaits.

Retirement is just like descending the mountain

How does this real life example perfectly reflect the financial planning being pursued by virtually 68% of the population (Figure 7.5 The answer is simple: pre-tax investments.  You’ll notice that the Figure 7.5 is titled “Many U.S. Households Have Tax-Advantaged Retirement Savings”. Wow, is that ever misleading. Pre-tax investments are not in any way tax-advantaged. What is the advantage? Many financial pornographers, like Dave Ramsey, profess that there is a mathematical advantage to investing pre-tax. Math proves him wrong. A couple of years ago I wrote a blog on this very topic so I won’t duplicate it here. So if you think I’m wrong then read this post first…and then feel free to comment.

How does Mount Everest tie into this tax debacle for the everyday American? Well, if you have money in an IRA, 401k, SEPP, or another government-run retirement plan (even Roth IRAs) then you have an enormous tax problem. You see, you are climbing the mountain with no knowledge of how to get down the mountain. What are the tax laws when you decide to retire? What are the distribution requirements? What are the tax rates? Do you know? Does anybody?

Only the financial planner with a crystal ball

There is not one single financial planner on the planet that can plan a retirement (using assets to provide income in order to maintain a desired lifestyle) for an individual when the majority of their portfolio is made up of government-run plans. The professional certainly doesn’t know the answers to the above questions and therefore has no idea how long the money will last. How much is the government going to take? If you have an IRA or any other pre-tax vehicle (the balance is irrelevant) then I have one question for you: how much of it is yours? No one knows. And no one will know until you’re standing on top of the mountain…and at that point you’ll only know one year at a time.  It’s just like climbing Mount Everest with no plan to descend until you’re finally standing on top…very dangerous strategy.  It’s actually worse than that because are the rules going to be the same when you’re 75 as they were when you started using the funds at age 65? It’s like only being able to plan your descent every 10 feet and having no idea what’s facing you at the next 10 feet. That’s not just dangerous but perilous.

Kelly, I’ll be in a lower tax bracket. You will? How? Why does the government put far more restrictions on after-tax positions (Roth IRA) – like income and contribution limits – than they do on the pre-tax (no income limitations and you can contribute a heck of a lot more). Seriously, why? Because they know that the only mathematical factor that determines the winner is the future tax rate and only they control that factor. You don’t control it otherwise your taxes would be zero. Roths aren’t even safe because they can change the rules at any point. Could they choose to tax the gains? Yep. Social Security was supposed to be tax-free forever but that changed.

The government is absolutely working in my favor…or is it?

Do you believe the government has your best interests at heart? Do you honestly believe that they are fine with you not paying taxes now so that you can pay less in the future? Do you feel the government will do everything it can to ensure the math lines up in your favor so you can get down the mountain? Me neither. Yet almost 70% of households are doing this very thing and unfortunately, virtually all of them will face a “tax descent” that will be immensely costly. Here’s a video that goes into some detail on this issue.

When did all this begin in the first place? Could that give us any insight? It sure can. Pension plans worked very well so why did all of that change in the 1980s when the government realized it had the largest working population in all of history (American history)? Why did pension plans fall out of favor to be replaced by the government-run retirement accounts? Who had lobbyists in that room?

Certainly the government was in that room because they could then control the largest portion of the citizens’ retirement assets. There’s an estimated $19,000,000,000,000 held in these accounts. That’s $19 trillion controlled, not by the citizens, but the government. The banking industry was certainly present in the lobbying for this because the rules with these accounts do not favor the investor having access to capital. Penalties, unfavorable loan features and simply the denial of access to the funds in these accounts (can’t access more than the loan provisions on a 401k while employed with the company – why?) mean that the investor will need the bank. Wall Street was also at the table because this would put the once untouchable pension now in the hands of the investment broker. It also would provide incredible job security for Wall Street because the investor can’t touch the money until they’re 59 ½ years old. If you’re 25 years old and contributing to a 401k then that represents 34 years of security for Wall Street. That’s awesome for them.

Turn the coin over. Look at the other side. Follow the history. Dig in. Let the light shine on this a little bit and you’ll realize that NONE of it is for your benefit. None.

There are solutions but you must be willing to have some conversations. You must be willing to plan a descent and not just for the summit! Our job is to ensure you get DOWN the mountain because, after all, that’s the goal.

Kelly O’Connor –


Website  –  YouTube  –  Facebook


Why did the chicken cross the road?

February 28, 2013

In November of 2009, I wrote a blog post titled: Why “the experts” confuse the average investor (here is the link). This topic popped into my mind the other day as I was talking with my 10-year old daughter. She asked me the classic question: “Daddy, why did the chicken cross the road?” Of course I knew that a rip-roaring joke was about to be laid out on the table…at least that’s how I had to portray it with her. Sure enough, she had a great answer and I busted out laughing. This got me thinking about my previously mentioned blog post because the answers to the question posed by my daughter are endless and they simply depend on who’s answering the question.

I thought, what if we asked this simple question about the chicken to various people, maybe even historical people? Would their answers have been the same or would they be different? So, here we go, “Why did the chicken cross the road?”

Their answers*

Dr. Seuss: Did the chicken cross the road? Did he cross it with a toad? Yes! The chicken crossed the road, but why it crossed it, I’ve not been told!

Ernest Hemingway: To die. In the rain.

Buddha: If you ask this question, you deny your own chicken nature.

Martin Luther King, Jr.: I envision a world where all chickens will be free to cross roads without having their motives called into question.

Colonel Sanders: I missed one?

Attorney: Chickens are invited to cross the road to join a class action lawsuit against all non-chickens.

Bill Clinton: I did not cross the road with THAT chicken. What do you mean by chicken? Could you define ‘chicken’ please?

George Bush Sr.: Read my lips, no new chickens will cross the road.

Retired truck driver: To prove to the armadillo that it could be done.

Albert Einstein: Did the chicken really cross the road, or did the road move beneath the chicken?

This is all in fun of course but the theme here is very similar to the variety of instructions given to people about solidifying their financial future. Having a clear understanding and a concise plan can be almost impossible because financial professionals virtually always disagree with each other and they never provide the same answer. Most people have heard the following conversation over and over again whenever they speak with a new financial expert: “How much money do you have? Where is it? Oh my gosh, why did they put you there!? You need to come over here because we’ll do so much better.”

Climbing Mount Everest

So, who can you trust? Who really has your best interests at heart? This is often the hardest hurdle to get past. This reminds me of climbing expeditions up Mount Everest. What is the most important phase of the climb? This single phase is responsible for over 75% of all deaths that occur during the quest to summit Everest. It’s the descent. The plan DOWN is the MOST important part of the entire expedition.

Financially it’s no different. The “climb” to the summit can be viewed as the accumulation phase as you work towards your retirement. The descent is the distribution phase of your assets to ensure you have enough money to live on for as long as you’ve planned to live. What does traditional planning focus on the most: i) simply getting to the summit or ii) getting to the summit with a very specific plan on how to get down? ING put out a series of TV commercials (here’s one of them) asking you if you “know your number”. That “number” is the amount you need to retire or more specifically the number you need TO GET TO THE TOP OF THE MOUNTAIN! But ING, what is the plan once that number is reached? Our focus should be even more intent on that phase of life than any other.

105% increase in 10 years!

Truly, if you hired a guide for your climb up the mountain and you asked him for his plan to get you down the mountain, how would you feel if he said this: “I don’t know, but once we get there we’ll figure it out.” Remember, 75% of those who die, die on the way down. Look around, how are people doing? We have an aging population, a declining workforce, an inability to save, a national debt that’s beyond comprehension and a government whose only answer is to print more money. According to (Table S5 Proposed Budget by Category) if we wiped out the entire Federal Government and the entire Military (all discretionary spending for 2012) then we’d still be short by $8,000,000,000 due to the various entitlement programs (we did a video on this very topic). Let that sink in, the ENTIRE federal government and the ENTIRE military and we’d still be short. Now, if you do this exact calculation for 2013 then we’d have a surplus of $360 billion (again, only if we got rid of the federal government and the military – obviously never going to happen) but look at the “total receipts” (all taxes collected)…they’re predicted to go up by 17.5%! If you look at the total receipts predicted in just 10 years, 2022, it’s a 105% increase from 2012. Are you ready for that? What’s your plan to deal with this issue? How are going to get down the mountain? If you’re only being told that you’ll be in a lower tax bracket in the future then you better get a new climbing guide.

Reduce future taxable income

There’s an endless amount of Congressional Budget Office reports and Government Accountability Office reports informing you that your taxes are going up plus the dollar will continue to weaken (the hidden tax). How will all of this affect you once you decide to “come off the mountain top”? Please understand, there are strategies and solutions to help mitigate some of these issues but you must be prioritizing strategies that will reduce your taxable income in the future! You will most assuredly face fewer deductions, fewer benefits, higher taxes and a weak dollar; therefore, reducing your taxable income in the future will be the biggest and most important aspect of your plan to efficiently climb down the mountain and make it out alive. The only factor that determines success is the reaction of the government. Shouldn’t we be studying them and NOT the financial products? All other discussions are only focused on making it to the summit. Our clients come to know what it means to have a plan for distribution and how their plan will ensure that they will NEVER be poor. Our job isn’t to help you strike it rich. Our job is to secure that you not only summit the mountain but that you make it down safely regardless of the conditions or challenges you face.

So, I ask you, why did the chicken cross the road? My answer, because she knew she could make it.

Kelly O’Connor –


Website  –  YouTube  –  Facebook

*some of these answers came from

Is 12% still possible in Mutual Funds? Better watch this one.

April 23, 2011

**UPDATE – The Video link below has been corrected** (as of May 5th, 2011)

I’m going to do this one a little differently.  Normally, I layout the math within my posts with my commentary to go alongside.  This time I’m just going to provide you a video link.

I’m kind of tired of pointing out huge errors in one certain financial “celebrity”.  Unfortunately, he just keeps providing incomplete information to the public.  Is he intentionally being deceitful?  I don’t think so.  Is he providing only one side of the coin?  Yep.

In March of 2011, this article appeared on his site.  A client of mine forwarded the link to me and asked me to respond.  After letting out a big sigh I decided to provide her a very detailed analysis. This video, is that analysis.

Folks, educate yourself.  I don’t care how successful you are, if you don’t learn to see the other side of the coin, well, then it’ll sneak up and bite you.

I’m Kelly O’Connor


Website  –  YouTube  –  Facebook

Your Baby Is UGLY!

April 5, 2011

The majority of hard-working Americans believe certain financial myths.  To attempt to correct these myths is similar to telling a mother her baby is ugly. The “conditioning” that has been experienced is frustrating, to say the least, but understandable…especially when you realize who has been doing the conditioning.

For example: why are we constantly directed to focus on the average rate-of-return?  From investment brokers, financial planners, “experts”, to our financial statements, all of these reference “the average”.  If we truly add up the numbers for each year and divide by the total number of years, does our statement really reflect a return that is the same as the average?


There’s a popular “expert” (he’s also a radio host, TV personality, and a creator of a curriculum that dominates financial classes in churches) who always quotes the average return.  In a recent article he took the inputs of the S&P 500 from 1990 to 2009 to get a 10% average. Mathematically he’s right.  He then claimed that your investments would have performed at 10% for each year during that time.  Mathematically he’s wrong.  Again, this is like telling a mother her baby is ugly.  It’s hard for most people to understand that the “average” is just a number but the “actual” return is what their statement reflects.

Let’s use the above example.  Between 1990 – 1999 the S&P 500 averaged 19% and between 2000 – 2009 it averaged 1%.  Add the decades together for a total of 20% and divide by two to get 10%…this is exactly what this supposed “expert” did to prove his point about how well you will do if you just “stay in the game”.  Now, let’s take $100,000 invested from 1990 to 2009 with an actual 10% rate of return (meaning you actually get a 10% return each and every year).  How much do you have?  You’d have a balance of $672,250.  Nice job.


Now, what would have happened if you actually rode the roller-coaster, took the losses and took the gains during that exact same time period?  Your balance would actually be $473,000 which represents an 8.08% rate-of-return (this assumes no fees and no taxation of course).  You see, you don’t earn the average.  Look at this example: Year 1 = 100% gain.  Year 2 = 50% loss.  Year  3 = 100% gain.  Year 4 = 50% loss.  What’s the average?  25% (100-50+100-50 / 4).  If I follow the logic from our expert and I invest $100 for four years at an average of 25% then my balance should be $244.  But, if my money was ACTUALLY in the market then Year 1 my $100 becomes $200 because of the 100% gain.  Year 2 I take a 50% loss so I’m back to $100.  Year 3 I again enjoy a 100% gain and have $200.  Year 4 I take another 50% loss to get me back to $100…right where I started.

The above mentioned “expert” could look me in the eye and say “look, you averaged 25%” and he’d be right but yet I earned NOTHING.  Even worse than that but I probably had to pay taxes on my gains for Year 1 and Year 3 (since he only recommends mutual funds)…all this hurts me even more.  My money didn’t even keep up with inflation but in fact it lost!  Would you be surprised to know that if you take a very conservative tax calculation and only 1.5% in fees that your actual rate-of-return would equal 4.72%?  It’s true.  Your statement wouldn’t show $672,250 at the end of year 20 but instead $251,590.


Folks, you have to ask yourself two questions:

  1. Who’s teaching you to focus on the average rate-of -return?
  2. Do you truly believe that they have your best interests at heart?

Seriously.  If you say “no” then are you willing to be told your baby is ugly?  Would you maybe reconsider a rate of 6% with no fees and taxation?  Which would you rather have, the $100 after four years or $126?  It doesn’t take much once you understand the impacts of losses, fees, taxation, and most important, the lost opportunity costs of all three.

Ordinary people CAN create extraordinary wealth.  It’s not just a game for those “with the money”.  You just have to learn how to get control of your money and we can show you how.

Kelly O’Connor –


Website  –  YouTube  –  Facebook

I’m astounded by the news that our economy is improving

February 21, 2011

Recently I saw a national newspaper headline an article about how our economy is improving and recovering.  I began to notice this in many other news sources and I have been just astounded at the inaccuracies of these claims.  Truly, this issue today is one of the most misleading ever to be imposed on the American people.  We are still in the midst of one of the most dangerous financial times in our country’s history.  Behind every dollar printed, behind every unemployed citizen, behind every person who retires or requires health care, is danger lying in wait.  “Oh come on!  You don’t really believe that?”

Taxes at 100%

I do.  We continuingly find information that just seems so unbelievable to us yet the math clearly indicates that our statement above is true.  Not only that, but the Congressional Budget Office maintains the same conclusions.  Consider this question: What if every American paid 100 percent taxes? What if our tax laws were changed from the 47,000 pages of tax code to the following two lines:

  1. What was your income?
  2. The amount in line one is the amount of tax you owed – SEND IT IN!

If this was the case, we would still have to borrow money to maintain our current standard of living.  Can you imagine?  Seriously, is that not just insane?

That water is about to boil

In the same manner that a frog will stay in the water if the heat is turned up slowly, we have slowly put our country and ourselves in this very challenging position.  Virtually anything could knock us down like a house of cards.

The list of financial challenges that we face could take up this whole page and most people are not paying attention.  Let’s list a few: our government spending, a declining workforce, an aging population, unsustainable government debt, unemployment, declining value of the dollar, declining housing values, increase in number of government employees, underfunded government pensions, underfunded union pensions, state government deficits, individual bankruptcies, credit tightening, currency fluctuation (world-wide), private sector’s inefficiency to save, government dependency at an all time high, hidden inflation (stealth tax), illegal immigration, health care costs, declining incomes (inflation adjusted), war-security-terror, the cost of going “green”, and foreclosures…just to name a few.

LEVERAGE will win!

So what does this mean for us?  Well, very simply, leverage is absolutely a must if we are to get through these issues.  It’s critical you learn how to leverage your money.  At Mountain Financial our job is not to make anyone rich (unlike the sales pitch by traditional financial planning), you can accomplish this goal with your own unique abilities.  Our job is to make sure that you will never be poor because the above issues will certainly work against our ability to create wealth.

It’s important for us to lay out the various benefits that we provide:

  1. A haven for your safe money.  We ask our client or prospect: where do you put your “safe” money?  How do you keep it safe?  Do you get a fair return on your “safe” money?  Would you like to know about “safe” money investments that provide better returns?
  2. Guarantees. Not only can we guarantee the return on their money, we can guarantee the return of their money.  This is a big issue and needs to be told to everyone…I don’t care how successful you are!
  3. Even if our client runs out of money, we can guarantee that he/she will never run out of income. We have products that provide a guaranteed paycheck for life under any financial circumstance. No one else can do that.
  4. Three miracles of investing:
  • First, we share the miracle of compound interest.  That is how the silent generation became wealthy.  They allowed compound interest to work on savings that they saved and kept saved.  Even at 3 percent, money would double twice from age 18 to age 66.
  • Second, we also provide the miracle of tax deferred compound interest.  This is known as the miracle of triple compounding: interest on principal, interest on interest, and interest on the taxes you would have paid in an investment taxed on an accrual basis. We can double a client’s pension just by teaching them the miracle of tax deferral.  We can do this without requiring any additional risk.  That is a miracle!
  • Finally, we provide the miracle of leveraging.  We can use pennies to buy dollars or we can have one dollar do the work of many dollars.  If the plan is arranged properly, all of this can be done without income tax liability. That is a financial miracle!  Now you may begin to understand why the wealthy have used it to maintain and pass on their wealth for generations.

The young, old, rich, middle‐class, employed, and unemployed can all benefit from these miracles and all of them need to learn the truth.

Kelly O’Connor –


Website  –  YouTube  –  Facebook

Scary Solutions, Scary Consequences

February 21, 2011

States have only four choices when it comes to their budgets:  raise taxes, lower services and benefits, borrow money, or some combination of the three.

67% Increase in Taxes!?

Big states like New York, New Jersey and California are contemplating large tax increases.  Illinois just proposed and passed a 67 percent income tax increase!  Most states don’t have the courage to do that. They pass sin taxes instead.  These are taxes on soda, sweets and snacks.  Taxes are being proposed on beer and wine.  Cigarettes are an obvious one.  Not so obvious options include taxing plastic shopping bags, fees on casinos and fees for tanning.  Even marijuana is being considered for legalization to harness more revenue for the states.

Bankruptcy for States?

Another option being considered by the federal government in lieu of a bailout is allowing the states to file for bankruptcy.  This would have a huge impact.  It would create leverage for the states in their negotiations with public employees unions and the huge holes in public retirement systems.  There will be dramatic shifts in public policy.  Who will have more power: taxpayers or bondholders? Have you ever truly thought of that question?  If not, you need to.

What happens to the promises made to public employees?  Nassau County in New York and Vallejo in California have already begun dramatic changes in their budgets with pension and health care reductions.  Employee reductions, tax increases, and finally borrowing, borrowing, borrowing.

This will have huge implications for our country.  Coupled with the federal government’s budget problems, in the short term calamity awaits the American people with higher taxes, lower benefits, serious inflation and ever-increasing volatility.  Ask yourself if you have a strategy for these issues.

We’re not the only one’s talking

Please, don’t just take our word for it.  We’d highly recommend you read some of these articles:

Title: Raise Taxes? Some States See the Value (Higher Taxes Wouldn’t End Some Deficits) (The New York Times, January 20, 2011; front page)

Title: Illinois Lawmakers Pass Massive Income Tax Increase (, January 12, 2011)

Title: States eye ‘sin’ taxation as salvation for budgets (The Washington Times, January 24, 2011; page 12)

Title: Will Congress Create “State” Bankruptcy Law? (New American, January 21, 2011)

Title: A Path Is Sought for States To Escape Debt Burdens (The New York Times, January 20, 2011)

Title: Mayors See No End to Hard Choices for Cities, Including Bankruptcy (The New York Times, January 22, 2011; section A, page 10)

Title: Defaults by Cities Looming as U.S. Mayors Say Deficits Hinder Debt Payment (Bloomberg, January 19, 2011)

Title: Strained States Turning To Laws To Curb Unions (The New York Times, January 4, 2011; front page)

Title: City Drafts Bankruptcy Exit (The Wall Street Journal, January 18, 2011; section A, page 6)

Title: New York State Seizes Finances of Nassau County (The New York Times, January 26, 2011)

Kelly O’Connor –


Website  –  YouTube  –  Facebook

Two Year Gift Tax Window

February 21, 2011

For 2011 and 2012 the estate tax and gift tax lifetime exclusion is $5 million and the tax rate above the exemption is 35 percent.  After 2012, the exclusion is $1 million and the tax rate above the exclusion is 55 percent.  The government will need more revenue.  You have a two-year, one time only window of opportunity in 2011 and 2012.

Estates can be reduced by up to $5 million per person.  A husband and wife could transfer up to $10 million to their families without the federal government getting ANY TAXES!  Any amount transferred over one million in the next two years is a gift…Ha! Ha!  You deserve to know about this time sensitive, limited offer!  You will be amazed to discover that you can leverage that gift into tens of millions of dollars transferred using life insurance and an irrevocable life insurance trust.

Here’s an example on a grand scale.  You have $30 million in assets.  Let’s say sixty or seventy percent of that value is in a business.  By gifting up to $10 million (husband and wife) to a trust and buying life insurance with it, you could preserve your estate for your family.  You could then spend or invest or save the rest of your estate without any concern for the preservation of it.

It is an amazing one time only opportunity.  If you read the article I am sharing below, the client in the article said this, “Why should a guy who worked long hours and took a lot of risk have to pay tax on what he wants to pass to his children?”  Why indeed!

Title: The $5 Million Tax Break (The Wall Street Journal, January 29‐30, 2011; section B, page 7)

Kelly O’Connor –


Website  –  YouTube  –  Facebook