Retirement, Plan B: Pension Paychecks

By Travis Johnson, Stock Gumshoe, February 18, 2009

Here we have another teaser email promising a rescue for those of us who’ve seen their 401k accounts fall by 50% (or more) … more proof that you don’t have to be sexy to get attention with a teaser ad today, you just have to imply that you can help to save the kind of retirement that probably too many people took for granted just a year ago … thus, the “Plan B Pension.”

By the way, I was at Costco the other day and they were giving out samples of … SPAM. There’s an economic indicator for you. It must take a pretty severe recession to make Spam popular outside its historic hotbeds of Guam and Hawaii.

So what’s the promise of today’s ad?

First of all, this is a service I’ve never looked at before — I think it’s new, but I’m not certain, it’s from the folks at Agora and it’s called the Lifetime Income Report, edited by Jim Nelson, who I’ve also never heard of. It’ll cost you $99 to sign up as a guinea pig for this service.

On to the hyperbole!

“Without doing a single moment’s work, now you can legally sneak onto the “payroll” of over 1,000 of America’s best companies…

* “And collect a regular ‘Plan B Pension’ check as often as every 12 days…

* “At any age and for as long as you like, even after you’ve already retired…

* “With nonstop annual incomes running as high as $120,000 or more…”

Well, even on a day like this when panic about layoffs is circulating most communities, I must say that there’s a certain appeal to the “without doing a single moment’s work” bit … at least for a lazy man like your friendly neighborhood Stock Gumshoe.

Are you getting our free Daily Update
"reveal" emails? If not,
just click here...


Some other clues about what they’re touting:

“What’s more, you can even pass this steady stream of annual cash that I’ll introduce you to… to your spouse, to your children, even to your grandchildren.”

Insert lots of chatter about their proven track record, how much better they are than fixed income investments, why they’re better than defined benefit pensions or 401ks, etc. etc.

“You can get into some of these ‘Plan B Pension’ programs with as little as $10.”

“In some of these ‘plans,’ you even get the chance to own shares in the stocks you’ve chosen at a fat discount to what others pay on the open market. That’s like getting an instant gain, the day you buy shares. It’s also a special ‘perk’ reserved only for members of these ‘plans.'”

“There are over 1,020 of these ‘Plan B Pension’ plans in America. You can enroll in as many of them as you like.”

So that sounds pretty nice — they call this discount the “Matching Bonus,” perhaps just to make it sound appealing for folks who get an employer match in their 401k.

“When it works, it’s a great benefit. But right now, cash-strapped companies have started slashing those ‘matching’ benefits too. Again, a benefit you don’t get… is no benefit at all.

“The thing is, ‘Plan B Pensions’ also offer your own kind of ‘matching.’ Because many of the 1,020 ‘plans’ you can choose from ‘match’ your gains by as much as 10%… with each regular payout.”

So why do they call this the “Ultimate Retirement Recovery Plan?”

As with so many ads of this ilk, there’s a “Special Report” — “The 10-Minute Retirement Recovery Plan: Six Easy Ways To Lock In Steady Income Checks For the Rest of Your Life. ”

And there’s a “library” of information that you’ll get access to with your subscription — “This is just one of the three reports you’ll find in the full ‘Plan B Retirement Library’ I want to send you. The whole set is yours right now, at no charge. I’m offering it to you free.”

(as long as you sign up for a subscription, of course)

And there’s a claim that now’s the best time to get in:

“… Horrible market offers you and me the best investment window in nearly 20 years for the kind of “Plan B Pension” strategy.”

They also get in a few “endorsements” of this strategy — a quote from Ned Davis Research, the famous value stock folks, that tells us that dividends and dividend growth stocks have done dramatically better than non-dividend-payers over the last 25 years or so. Probably not a surprise to most.

And we get a blurb about everyone’s favorite Penn Prophet, too:

“It’s this special combination of income growth and compounding — a step beyond just collecting stock, bond, or fund income — that famous Wharton Professor Dr. Jeremy Siegel credits with producing a whopping 97% of all the real money made on the S&P 500.”

So … no surprises here, except perhaps from the folks at Stansberry & Associates who’ve been heavily marketing this same strategy for years. I wonder if Porter Stansberry and Tom Dyson are grumpy that Jim Nelson and their colleagues down the road at Agora are trying to steal their marketing thunder — I guess it wouldn’t be the first time, once you see a marketing idea that works for a newsletter, get used to it, you’ll be seeing it again soon from someone else, wearing a slightly different hat.

Oh, wait — I didn’t tell you what it is: The “Plan B Retirement” is yet another teaser for the idea of investing in Dividend Reinvestment Plans and Direct Stock Purchase Plans (DRIPs and DSPPs, respectively).

If you’ve been stranded out here on Gumshoe Island for any time at all, you’ve heard from me on this before — essentially, many big companies let you buy stock directly from the company. It’s true, some of them offer a discount on these purchases, or on reinvested dividends (that’s the “match”), though certainly not all of them do.

The big benefit that gets the attention of Ned Davis Research and Jeremy Siegel (and many others) is dividend compounding, which has indeed accounted for a significant portion of the long term returns of the S&P 500. Of course, you don’t have to invest directly with a company to reinvest dividends, most brokers will do that for you, too, often for free — though you don’t generally get any of that potential “match/discount” on the reinvestment. On the flip side, many of these programs have fees and minimums, and they have their own pros and cons, even apart from the stability of the stocks you’re buying.

And that is, of course, part of the challenge — and the promise of any newsletter that focuses on this strategy: finding the right stocks. Generally the focus of all of these kinds of strategies is on dividends that are good but not too good, payout ratios that leave room for dividend increases in the future, historic dividend growth, stable businesses (with “no banks” being a more recent addition to these kinds of screens), understandable businesses, etc. You can look through the holdings of any dividend growth mutual fund to see the kinds of stocks you’re going to see recommended for these kinds of services, but you’ll probably see names like Wal Mart, Johnson and Johnson, McDonald’s, Microsoft, Procter and Gamble, Exxon Mobil and their peers … and a couple years ago you would have probably seen Bank of America, General Electric and many more.

I won’t just copy and paste over all the information I’ve shared about these programs before, so if you’d like more information about the various ways that you can buy stock directly from a company for one of these “Plan B Pensions” … or see the ways that other folks have teased this same strategy, check out these other recent articles:

Be a “One Share Millionaire” with the US Postal Service.

and the 424 Dividend Boost.

So … a cynic might say that almost every ad that promises a “saved retirement” thanks to some sort of “secret” income plan is either going to refer to dividend reinvestment, or to selling covered calls … this one is the former, I wouldn’t be surprised to also see plenty more of the latter. If anyone has tried this Lifetime Income Report, click here to let us know what you thought of it — or if you’ve other thoughts about DRIP investing that you’d like to share, feel free to comment below.

Enjoy your day, everyone!


guest

12345

This site uses Akismet to reduce spam. Learn how your comment data is processed.

41 Comments
Inline Feedbacks
View all comments
Tensor
Guest
Tensor
August 13, 2009 1:38 pm

You are a tool.

William Hicks
Member
September 25, 2009 6:52 am

I used to contribute small monthly amounts to Dividend Re-Investment Plans; I owned shares in Walt Disney, Procter & Gamble, General Electric, Johnson & Johnson, and Microsoft. G.E., Disney & P& G’s monthly fees became exorbitant and the stacks of paper I was forced to keep and headaches at tax time just became unendurable. I invest in most of these companies now and am able to buy fractional shares via Foliofn.com; they provide me with complete tax records at the end of the year, re-invest my dividends, and easily allow me to see my positions/gains any time I want all for one yearly maintenance fee. Check writing for when I must have access to emergency funds is also provided.

Add a Topic
152
Jan
Guest
Jan
January 31, 2010 5:13 pm

i trust nothing in the way of investment news letters whether email or snail mail . as one of the ” main street ” brood , i don’t even trust wall street ; especially since the housing market bust and bank failures . fortunately before and now in retirement i’m not in a position to have to hussle to recoupe any losses to my retirement accounts because i manage them myself . the scam artists know whom to target if you are sitting on any amount of cash that’s worth it to them to seperate from their victims . as anyone on main street should know by now ; the wall stree ” fat cats ” look after their own wallets while trying to suck the little guys dry .

Add a Topic
1209
Add a Topic
1209
B.Yoganand Patnaik
Guest
B.Yoganand Patnaik
February 27, 2010 8:18 am

Sir,

Greetings from India!

Please let me determine whether Plan B Pensions are genuine one ?

If so, please help me How to procedure to follow?

Thanks a ton and I remain,Sirs

Yours Faithfully,
B.Yoganand patnaik

Add a Topic
247
Paul
Irregular
Paul
March 9, 2010 1:18 pm

This past year I got into one of the “plan b” type programs and bought a bunch of dividend producing stocks. With all the DRIP purchases I found that my income tax preparation too many, many more hours to match up the multiple purchases with sales.It seemed like a lot of work for tiny dividends. Then I started worrying about the 60 day repurchase rules when selling stocks. The Drip ended up adding small amounts of stock during the 60 day period and I still haven’t figured out if I’m handling all these issues correctly. I turned off DRIP on all my etrade stocks and just take the cash and add it to my investment cash.

Add a Topic
965
Add a Topic
996
Add a Topic
152
Ben
Member
Ben
April 17, 2010 9:49 pm

If plan b pensions were such a good idea wouldn't the newsletter writer just invest in all of them and retire himself? Why work anymore?

David Payne
Guest
David Payne
April 22, 2010 9:40 pm

Thanks for confirmating what I thought all along about this hype. About 30 years ago I bought a book on the bargain table for about $3 called Buying Stock Without a Broker. It was a good listing of DRIP and DSPP's. I picked about 10 and sent requests for info. I joined 3. One was bought a few years later and the plan payed off in cash for about a 20% gain. I am still in XOM and JCI. I put a total of $800 up 30 years ago and have about $6500 now. Not spectacular but completely no hassle and no fees. I get 4 statemens and a 1099_DIV every year plus an annual report and proxy. Maybe I should start a newsletter and hype my experience.

Add a Topic
5971
Add a Topic
965
Add a Topic
1340
Retirement
Guest
May 7, 2010 6:46 pm

Thank you gumshoe. These email come-ons are too good to be true. Don't people get that yet. What it the expression: 'there's one born every minute'.

Phil Johnson
Guest
June 8, 2010 11:55 pm

Nice… I just got this one in the mail and I figured it was a DRiP thing, but thought I'd check around. And sure enough your site gave me the right answer on the first try. 🙂

Add a Topic
965
Chick
Guest
Chick
September 10, 2010 1:44 pm

For those frustrated by DRIP tax accounting and paperwork, my personal view (for that what's worth) is that DRIPs used to make sense for the retail investor when the commissions to buy stocks could be hundreds of dollars per trade. Nowadays you can buy stocks through a discount broker at less than $10 a trade, so the value of formal DRIP plans has eroded. I can create your own DRIP-style investment plan simply by using dividend distributions to buy more of the stocks you like on days when the market is down. Fidelity tracks my basis for me, and sends me an aggregated form 1099B, so I'm content. Some DRIP plans allow you to reinvest in the stocks you own at a DISCOUNT to the market price. I hate paperwork, so I those are the only DRIPs I would consider these days. This advice comes to you free, and maybe you get what you pay for. Happy hunting!

Add a Topic
965
Add a Topic
965
Add a Topic
3600
jeff
jeff
November 7, 2010 1:28 pm

Those annoying "audio videos" (the text is the only visual) inevitably drone on for a half hour or so… which gives you the time to open another tab with google or bing after you've got a couple of good search terms, eg, the Greenland uranium mines or the Tupi oilfiends (petrobras). This works… and at least you know the stock is being pumped by someone!

Add a Topic
520
Add a Topic
681
Add a Topic
5971
Otis Hughley
Guest
Otis Hughley
December 28, 2013 9:22 am

Honestly, stock and other investments has history of on any given day. However, we evaluate the pros and cons and make our individual decisions based on advise and info obtained. …WHO KNOWS??

Add a Topic
5971
Otis Hughley
Guest
Otis Hughley
December 28, 2013 9:39 am

HOW CAN THEY GUARANTEE SO MANY CHECKS PER MONTH? IS IT ACCORDING TO THE SIZE OF INVESTMENT?