Economic Secrets of the New Retirement Environment™

Copyright © 2009 by DaRayl D. Davis.

All rights reserved. No part of this book may be reproduced or transmitted in

any form or by any means, electronic or mechanical, including photocopying,

recording, or by any information storage and retrieval system, without

permission in writing from the copyright owner.

This book was printed in the United States of America.

To order additional copies of this book, contact:

Xlibris Corporation

1-888-795-4274

www.Xlibris.com

Orders@Xlibris.com

46605

Contents

Acknowledgements

Author’s Note

Why should I read this book?

The Strangest Secret

Introduction

Filtering the Jargon

Lest We Forget

PART ONE

ONE

TWO

THREE

PART TWO

FOUR

FIVE

SIX

SEVEN

PART THREE

EIGHT

NINE

TEN

ELEVEN

TWELVE

THIRTEEN

FOURTEEN

FIFTEEN

SIXTEEN

FREE ENCLOSURE

IRA vs. IRS RESOURCE GUIDE

Letter to Congress

RESOURCES

About the Author

Acknowledgements

I am thankful to God for all of the people He has placed in my life to walk with me thus far. I realize that I would not be the person that I am and would not have the opportunities that I have were it not for His Grace and Mercy and the favor that I have found with God and with so many people. I am especially thankful for my Lord and Savior Jesus Christ for setting the ultimate example.

A very special thank you and deep appreciation goes to my mother, Debra Davis. I want to thank you for your continued sacrifice over my entire lifetime. You are a major inspiration for me daily in all that I strive to do that is good. I appreciate your encouragement from the beginning of my entrepreneurial journey. I am VERY fortunate to have a mother as beautiful, strong, graceful, loving, courageous, talented and gifted as you. It is my desire everyday to live up to the affectionate sobriquet of wonderful one.

A very special thank you and deep appreciation goes to my father, Rev. Sidney Davis, Jr. and Sharon E. Davis. I appreciate you dad for your unrelenting commitment to instill discipline in me and for the foundational character you helped to establish in me. My mission, in part, is to continue to make your name good in the earth for generations to come.

I’m grateful for the family that I was born into and would like to acknowledge all of you for your support at various stages in my life. I appreciate each of my siblings, Cornell, Sidney, Kerry, Detra, Jeremiah, Joshua, Isaiah, Christine and Joseph, my Aunts Peggy, Pat, Jessie, Gina, Thyra and Veda, my Uncles Johnnie, Don, Reginald, Gregory, Joseph, LeRoy, Nicholas, and Junius. I’m grateful for each of my cousins, their spouses and children, my nieces and nephews. I’m hopeful that I represent you all well and can serve as an example that you can be proud of.

I am grateful for my entire church family, From the Heart Church Ministries. Thank you to my Episcopal Pastor, Dr. John A. Cherry and Rev. Diana P. Cherry for your steadfast example of obedience to God in every area of your life and your uncompromised delivery of God’s Word. Thank you to my Pastor, John A. Cherry II and Rev. Lawanda Cherry for your consistent Godly counsel every Sunday and Tuesday. A special thank you to the From the Heart Children’s Choir, I love you all!

To my editor, Antoinette Foxx, I extend my appreciation for your diligent work and your keen eye that delivered a consistent and fluid manuscript. Any errors that remain are from my tinkering.

I would like to thank all of the associates and clients of Financial Assurance Corporation, past and present, for your assistance along the journey. Without your support, this platform wouldn’t be possible. I’d like to express a special thank you to Monique Chase, Paxton Dailey, Donnell Smith, Sidney Davis III, Rita Bailey, Darlene Jenkins, and Judy Johnson for years of labor and sacrifice to support FAC through the toughest of times. Thank you to A.J. Hunter and Kenneth Spinner, Jr. for going the extra mile to help keep things together while I focused on this project. I would like to offer a special thank you to Robert T. Graves and Bonnie Ross Graves; Melvin Thomas; Brian Madigan; Jeffrey Scott; Armer and Ivon Gaston; Johnnie and Carolyn Jackson; Sandra Butler; The Warren Family; Dorothy Koger; Linda McKetney; Leona Johnson and Ethel Jones for your support above and beyond being clients.

I would like to thank M.H. Jim Estepp for being an example to me and opening numerous doors. I’d also like to thank Nancy Estepp, James Jim the Younger Estepp and the entire Board of Directors of the Greater Prince George’s Business Roundtable for your continued support. You ladies and gentlemen are a constant source of inspiration as I review your accomplishments and witness your continued growth and progress in service to citizens of Maryland, Virginia, and the District and across our nation.

I would like to thank Team Andrews at Andrews Air Force Base (Home of Air Force One) for embracing me as an Honorary Commander. In particular I’m thankful to Colonel Steve Shep Shepro, Commander of the 316th Wing, and host to more than 45 organizations at the base often called The Gateway to the Nation’s Capitol, and Colonel Steven Harrison, Commander of the 89th Airlift Wing, responsible for providing safe, reliable world-wide airlift and logistical support for the President of the United States, Vice President, Cabinet members and other high-ranking U.S and foreign government officials. Thank you for your partnership with GPBR and the Andrews Business and Community Alliance.

I most certainly want to thank Ed Slott and the entire team at Ed Slott & Company, LLC for your diligence to be the best IRA resource available. Thank you for helping me to become the IRA expert that I am today. My readers, listeners and viewers thank you!

I would like to thank my friend and partner Lamell McMorris for being an example and an inspiration to me from the halls of Whitney Young to the halls of Congress and the White House. Keep building the Dream and extending the Legacy.

I want to thank Gary Flowers for connecting me with leadership and legislation that is relevant to my mission. You’re definitely a bridge to roads that lead to purpose.

To my friend and my sister Mariko Bennett I want to say thank you for sharing your network and supporting this project. You’re a consummate professional-people-connector.

I’d like to thank Michael White for introducing me to radio and providing the outlet for me to begin to develop my voice. Thank you to Matt Anderson for sharing your show with me and being a credible witness and example for nearly three years.

To my Producer at Wealth of the Nation™, Teria Rogers, I’d like to say thank you for teaching me the next level of radio and encouraging me to leverage the platform.

I would like to extend a special thank you to my Operation Hope family. Thank you Jena Roscoe for being a bridge to everyone. I appreciate you for all that you do behind the scenes and avoiding the recognition you deserve. I want to thank John Hope Bryant for being the visionary behind the Silver Rights Movement and an excellent example of a servant, ‘the greatest among you.’ Let’s pave Jericho Road together through empowerment and financial literacy. Thank you Sherry John for keeping us all connected.

I want to thank my good friend Nadine Amado, CPA for your support in keeping this project going when I might have otherwise been discouraged and for volunteering to help where you could.

I would like to thank Michael Canty of Bearing Fruit Enterprises for helping to communicate the message through use of the Internet.

I want to thank Michael Jackson of Mastery of Marketing for helping to bring the images together to create the cover and website.

I want to thank Jay and Sophia Pope of Xcellent Digital Video Productions for the photo that graces the front cover and all the images that you created for the website.

I would like to say thank you to Jalla-Anne Louis-Fernand, Esq. for putting together the historical tax table that helped bring the history of taxes to life.

I want to say thank you to my friend Cynné Simpson for being willing to connect me with the folks at ABC 7 and News Channel 8. It’s good to know you’re on my side.

I want to especially thank my public relations team at Annie Jennings PR. Of course I appreciate you Annie for being such an innovator in the world of PR. Thank you for opening so many doors. I want to say thank you Susan for recommending to Annie that we should work together as we have and for booking the national media spots. And to Stacy and Jason, I appreciate your tenacity to get my name out to the media through radio.

Thank you to Tom Bird and Christopher Guerriero for inspiring me and encouraging me to finish this book. Thank you for paving a roadway to completion.

To all of you who are reading this book and recommending that others pick it up, I say thank you!

To the memory of my Grandparents:

Sidney Davis, Sr. and Annie L. Davis

And

Johnnie M. Turner, Sr. and Margaret Weeden Turner

To the memory of my Uncle:

Rev. Carl B. Turner, M.D.

I’m thankful to God for all that you deposited in my life, especially the inspiration!

Author’s Note

This book is about the metamorphosis that retirement is undergoing and the distress that it will cause you and everyone you know if you are not properly prepared. Because retirement is such a significant life stage, it impacts every area of our lives, financially and otherwise. Imagine going in to see your doctor for your annual physical and check up. At the conclusion of your examination, she says you have a weak and irregular heart beat but everything else seems fine. What might you be thinking? Are you thinking that’s great news!? Or might you be concerned as to how you will appropriately address this matter of the heart because you understand that your heart is essential to everything else working properly?

My guess is that a problem with your heart would greatly concern you. So it is with your retirement. Americans today have trillions of dollars invested in retirement plans, the federal Thrift Savings Plan (TSP), 401(k)’s, 403(b)’s and other IRA’s. For many, these IRA’s have grown to be their largest asset outside of their homes. For others, their IRA is their largest asset. Regardless of the size of your retirement savings nest egg, one mistake jeopardizes your entire financial future, which impacts every thing else. Though the focus of this book is to introduce you to The New Retirement Environment™, it is not limited to retirement. I will make an ambitious attempt to expose you to the realities of the new world in which we live that will have many of us working longer as we embrace longer lives. This new longevity will also introduce retirements that will last decades.

The Twenty-first Century has ushered us into an era of unprecedented opportunity and I will present some thoughtful ways of how to maximize these opportunities. However, there are also new dangers that lie ahead that I will point out so that you may steer clear and minimize the impact of these dangers. Several years ago, Dr. Ken Dychtwald, the President of Age Wave and author of several authoritative works on aging in America, spoke to a group of advisors in Minneapolis, Minnesota. I was fortunate to be among this group of advisors listening to one of the most respected minds in the world on this subject of aging. During his address, Dr. Dychtwald spoke of a rafting trip that he had recently taken with his son on the Colorado River. He noted that the river seemed calm initially but within a few minutes into the journey they were in the midst of level-4 rapids. He said immediately I knew who the most important person on that raft was . . . the guide! Because he knew what was up ahead. My goal with this book is to be your guide and help you navigate the New Retirement Environment™ and create the life you desire.

DaRayl D. Davis

Why should I read this book?

That is an excellent question to have answered right up front because it will require time to read this book, and time is essentially the only resource we can spend and not regain. So the goal of this book as it relates to your time is that you will receive an exponential return on the value of the time you’ll spend reading by avoiding time wasting mistakes in your future. It’s becoming widely accepted that we are living longer. The secrets contained in this book will help you to prepare for this new longevity. You might ask, Why do I need help preparing for longevity, can’t I just continue doing what I’ve been doing, only longer? Absolutely! And to give you an idea of what that might get you, I’d like to introduce you to the wisdom of Earl Nightingale in just a moment. But first, let’s explore a few facts.

America is the wealthiest nation on the planet. Americans have endured some extremely tough times and have been resilient in times of crisis from the Civil War to the Great Depression, from the attack on Pearl Harbor to the 9-11 terrorist attacks. Collectively, we have a lot to be proud of. We are a great nation! The number of millionaires in America reached record highs in 2004, hitting 7.5 million according to a survey by the Spectrum Group, a Chicago-based research firm. And, in the midst of this prosperity, we may be under prepared and overconfident. According to a survey by McKinsey & Company of more than 3,000 middle-income to affluent consumers age 40 to 75, gauging their concerns about their current or future retirement, consumers are increasingly anxious about their financial futures. Only 25 percent of respondents reported developing an overall retirement plan with a planner, the survey showed, while only 14 percent said their planner advised them on how much to save for retirement. In her white paper entitled Boomers: Underprepared and Overconfident, Elizabeth O’Brien noted the authors saying Conventional wisdom holds that retirement doesn’t become a front-burner issue for most consumers until they’re a decade or so from ceasing full-time work. I would encourage you to ask yourself How am I doing? What does your financial picture look like today and what might it look like tomorrow, in your retirement, with all of that new longevity?

According to a study by the U.S. Department of Health and Human Services, 96 percent of Americans never achieve financial independence. They end up depending on charity, welfare, family, or are forced to keep working past their retirement age. According to the IRS, 85 percent of the people reaching age 65 years don’t have even $200 in their bank accounts! The U.S. Census Bureau says that 97 percent of Americans never realize their dreams and desires in life, and are forced to retire on an annual income of $10,000 or less! The average American is in debt and in recent times we’ve collectively had a negative savings rate. Why should you read this book? Because to do the same things and expect different results has been given as the definition of insanity! Reading this book is the first action step towards thinking differently and acting differently. I’m now going to introduce you to Earl Nightingale, one of only 100 survivors from the Battleship Arizona attack at Pearl Harbor, the Dean of Personal Development, world-renowned author and speaker and an inspiration to millions for generations, including me. The secret that he shared with the world in the midst of the Baby Boom is reverberated by the condition of Americans today.

The Strangest Secret

"I’d like to tell you about The Strangest Secret in the World. Some years ago the late Nobel Prize winning Dr. Albert Schweitzer was being interviewed in London and the reporter asked him, ‘Doctor, what’s wrong with men today?’ And the great Doctor was silent a moment and then he said, ‘men simply don’t think.’ It’s about this that I want to talk with you. We live today in a golden age. This is an era that man has looked forward to, dreamed of and worked towards for thousands of years. But since it’s here we pretty well take it for granted. We in America are particularly fortunate to live in the richest land that ever existed on the face of the earth; a land of abundant opportunity for every one. But, do you know what happens? Well let’s take a hundred men who start even at the age of twenty-five. Do you have any idea what will happen to those men by the time they’re sixty-five? These one-hundred who all start even at the age of twenty-five believe they’re going to be successful. If you ask any one of these men if he wanted to be a success he’d tell you he did. And, you’d notice that he was eager toward life; that there was a certain sparkle in his eye, an erectness to his carriage, and life seemed like a pretty interesting adventure to him. But, by the time they’re 65, one will be rich, four will be financially independent, five will still be working, 54 will be broke. Now think a moment, out of the one hundred only five make the grade. Now why do so many fail? What has happened to the sparkle that was there when they were twenty-five? What’s become of their dreams, their hopes their plans? And, why is there such a large disparity between what these men intended to do and what they actually accomplished?

When we say about 5 percent achieve success we have to define success. And here’s the best definition I’ve ever been able to find. Success is the progressive realization of a worthy ideal. If a man is working toward a predetermined goal and knows where he’s going, that man is a success. If he’s not doing that, he’s a failure. Success is the progressive realization of a worthy ideal. Rollo May, the distinguished psychiatrist, wrote a wonderful book called Man’s Search for Himself. And in this book he says ‘the opposite of courage in our society is not cowardice, it is conformity.’ And there you have the trouble today, it’s conformity. People acting like everyone else without knowing why, without knowing where they’re going. Now think of it, in America right now there are over 18 million people 65 years of age and older. And, most of them are broke! They’re dependent on someone else for life’s necessities. Now we learn to read by the time we’re seven. We learn to make a living by the time we’re twenty-five. Usually by that time we’re not only making a living, we’re supporting a family. And yet by the time we’re 65, we haven’t learned how to become financially independent in the richest land that has ever been known. Why? We conform. And the trouble is that we’re acting like the wrong percentage group, the ninety-five who don’t succeed.

Now why do these people conform? Well they really don’t know. These people believe that their lives are shaped by circumstances, by things that happen to them; by exterior forces. They are outer directed people. A survey was made one time that covered a lot of men, working men. And these men were asked ‘why do you work? Why do you get up in the morning?’ 19 out of 20 had no idea. If you ask them they’ll say ‘well everyone goes to work in the morning’ and that’s the reason they do it, because everyone else is doing it. Now let’s get back to our definition of success. Who succeeds? The only person who succeeds is the person who is progressively realizing a worthy ideal. It’s the person who says ‘I’m going to become this’ and begins to work towards that goal.

I’ll tell you who the successful people are. A success is the school teacher who is teaching school because that’s what he or she wants to do. The success is the woman who’s a wife and mother because she wanted to become a wife and mother and is doing a good job of it. The success is the man who runs the corner gas station because that was his dream, that’s what he wanted to do. The success is the successful salesman who wants to become a top-notch salesman and grow and build with his organization. A success is anyone who is doing deliberately a predetermined job because that’s what he decided to do deliberately. But only 1 out of 20 does that. That’s why today there really isn’t any competition unless we make it for ourselves. Instead of competing, all we have to do is create. You know for twenty years I looked for the key which would determine what would happen to a human being. Was there a key I wanted to know that would make the future a promise that we could foretell to a large extent? Was there a key that would guarantee a person becoming successful if he only knew about it and knew how to use it? Well there is such a key, and I’ve found it.

Have you ever wondered why so many men work so hard and honestly without ever achieving anything in particular? And others don’t seem to work hard and yet seem to get everything? They seem to have the magic touch. You’ve heard them say that about someone ‘everything he touches turns to gold.’ And have you ever noticed that a man who becomes successful tends to continue to become successful? And on the other hand, have you noticed how a man who is a failure tends to continue to fail? Well it’s because of goals. Some of us have goals, some don’t. People with goals succeed because they know where they’re going. It’s that simple. Think of a ship leaving a harbor. And, think of it with the complete voyage mapped out and planned. The captain and crew know exactly where it’s going and how long it will take. It has a definite goal. Now 9,999 times out of 10,000 it will get to where it started out to get. Now let’s take another ship just like the first, only let’s not put a crew on it or a captain at the helm. Let’s give it no aiming point, no goal, no destination, we just start the engines and let it go. I think you’ll agree with me if it gets out of the harbor at all it’ll either sink or wind up on some deserted beach a derelict. It can’t go any place because it has no destination and no guidance. And it’s the same with a human being.

Take the salesman for example. There’s no other person in the world today with the future of a good salesman. Selling is the world’s highest paid profession, if we’re good at it and if we know where we’re going. Every company needs top notch salesmen and they reward those men, the sky is the limit for them. But how many can you find? Someone once said the human race is fixed, not to prevent the strong from winning but to prevent the weak from losing. The American economy today can be likened to a convoy in time of war. The entire economy is slowed down to protect its weakest link; just as the convoy had developed the speed to permit its slowest vessel to remain in formation. That’s why it’s so easy to make a living today. It takes no particular brains or talent to make a living or support a family today. So we have a plateau of so-called security if that’s what a person is looking for. But we do have to decide how high above this plateau we want to aim.

Now let’s get back to the strangest secret in the world, the story that I wanted to tell you today. Why do men with goals succeed in life and men without them fail? Well let me tell you something which if you really understand it will alter your life immediately. If you understand completely what I’m going to tell you, from this moment on your life will never be the same again. You will suddenly find that good luck just seems to be attracted to you. The things you want just seem to fall in line. And from now on you won’t have the problems, the worries, the gnawing lump of anxiety that perhaps you’ve experienced before. Doubt, fear, well they’ll be things of the past. Here’s the key to success, and the key to failure. We become what we think about!"

- Earl Nightingale, 1956

As we prepare to embark upon The Economic Secrets of the New Retirement Environment™, I thought it appropriate to share with you the above excerpt from a talk Earl Nightingale gave to his sales organization more than fifty years ago. You might agree with and appreciate the timeless wisdom that he imparted. I’m amazed at how little things have changed (really) and how relevant his ideas are to the state of America today, though he shared them five decades earlier.

Hopefully you’ve been inspired, as I have been, to pursue the type of thinking and mindset that will make for the future you desire. Retirement is a significant life-stage that we can largely influence by what we think about it. Why? Because what we think, our mindset, determines our actions and our behaviors. And our actions and behaviors, or the choices we make, will determine our results. A good first step is to forget what you think you know about retirement while reading this book. Once you’ve finished reading this book, you’ll want to read it again.

After you’ve begun to apply these secrets to your life, share them with others. Gift a copy of this book to your friends and family. As a child I was a member of the J.V. Richardson Chorus at Mt. Sinai Missionary Baptist Church on the West Side of Chicago, IL (USA). We used to sing the song Pass It On. One verse says, It only takes a spark to get a fire going. And soon all those around can warm up in its glowing. That’s how it is with God’s Love, once you’ve experienced it. You spread His Love to everyone; you want to pass it on. You can be the spark to awaken those around you to what truly lies ahead. And you can introduce them to the secrets to shape their future. Let’s pass it on!

Introduction

The Nearly Perfect Season

By the year 2030, there will be 70 million people age 65 and older, more than twice the population for that age group in 2000.

Source: U. S. Bureau of Labor Statistics

In 2007-08, the NFL’s New England Patriots may not have begun the season with the goal of making history. But as the season progressed and the wins were collecting, sights were set on eclipsing the 1972 Miami Dolphins for the Perfect Season. The Patriots did surpass the ’72 Dolphins’ 17-0 record on their way to lay claim to a Super Bowl 42 victory which would’ve been the team’s fourth NFL title under Head Coach Bill Belichick. The Patriots set a number of records and indeed did make history. They became the highest scoring team in NFL history. They are the only team in NFL history to start a season with 18 consecutive wins. That marked the first time in 100 years that a team in the four major pro sports accomplished such a feat. Tom Brady set a record with 50 touchdown passes and teammate Randy Moss added a record of his own with 23 touchdown receptions. Even with all of these wonderful ingredients, the Patriots and the world knew that the perfect season would only be complete if they were to win the Super Bowl.

The match-up between the unbeaten New England Patriots and the New York Giants, who had orchestrated 10 straight road victories, certainly had all of the ingredients for a history-making sporting event. History would be made either way, and it certainly was. According to Nielsen Media Research, it was the most-watched Super Bowl ever, with 97.5 million viewers! It was the second most watched TV show ever behind the M-A-S-H finale in 1983, which was viewed by 106 million viewers. I’m confident you already know the