THE NO-COMPROMISE RETIREMENT PLAN • 59
funds in a 401(k) or IRA. Indexing delivers a steady, predictable growth pattern — just what you need in retirement.
What’s the Worst That Can Happen? By now, you’ve probably noticed I’m a big fan of indexing. It’s an incredibly powerful way to grow funds when the market is up while also protecting them when the market is down. But — as an actuary — I wasn’t finished crunching numbers. One afternoon, chatting with my brother-in-law, I asked him what he thought was the scariest economic period is U.S. history. He gave the answer most people my generation give: the Great Depression. He and I had heard from our parents about the wild market swings that took place throughout the 1930s, and how the stock market collapsed on itself, destroying the savings of many, many Americans. It was truly an unprecedented time. So, I decided to see how the Great Depression would have turned out for someone in an IUL policy. How would this strategy fare in one of the most turbulent economies our country has ever known? First, let’s look at what the stock market did during the Great Depression and the ensuing recovery. Today, the S&P 500®, that measurement we’ve discussed of the 500 largest stocks, is the standard-bearer for how we measure a market’s strength or weakness. Of course, in 1929, analysts didn’t measure the top 500 stocks. Thankfully, academics have gone back and calculated how the top 500 stocks in the market performed in the 1920s and 30s.
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