Investing in an IRA after you're retired is not smart.
In this episode, I'm going to address the question
"Can I invest in an IRA if I'm retired?" Well, yes, under certain conditions. But I
would not recommend it. You're going to learn why.
I'm Doug Andrew. I've been a retirement planning specialist for more than 46
years. So, I've helped many people plan for the
retirement. But especially, I've helped most people
with at retirement planning. Because what you do
at retirement is totally different than maybe what you did
for retirement. Now, a lot of times people ask the question, "Well, golly. I've got
some money. I'm still earning income or
whatever. Can I invest in an IRA after retirement?" Well,
there are certain rules. So, we'll go through those first. And then
I want to share with you why i do not think that is a smart idea because
there's way better alternatives. So, when we talk
about the rules, these were actually modified or passed
in the secure act of 2019. And so, the basic rules are that you have
to be earning income. If you're going to contribute to an IRA
after retirement, you have to have earned income. There's 3 types of income
that we report on our 1040 tax returns ever
since 1986 tax reform. Earned income, that's salaries and wages and so forth.
Passive income which might be rents leases or what have you. And then we have
portfolio income which is like interest and dividends and so forth
from money in a bank or credit union or
stocks or what-have-you. So, you have to have earned income to be
able to contribute. You cannot contribute more to an IRA than you're earning.
And so, you have to abide by certain contribution limits when you do that. So,
the simple answer is yes you can but you can't
contribute more than what you're earning. And you have to also stay within the IRS
contribution limits. But I would not recommend it. Now,
by the way a Roth-IRA, you can contribute for the rest of your
life if you would like to a Roth. But you have to abide by
those conditions on when you can access the money and so forth.
So, yes. Now, why do I not recommend that people put money into an IRA after
retiring? It's the same reason basically why
I have never owned an IRA or 401K, I never will. I've never owned a Roth-IRA,
401K, I never will because even though they may be a
good way to go, they are far cry from the best way to go. Because you can
have any of the few benefits that a Roth or
an IRA, 401K has but you can have way more benefits have...
Sometimes 100 to 400 percent more net spendable retirement
income by not going that route. So, let me
explain sort of the pitfalls the drawbacks of a
qualified plan like an IRA or 401K and why I feel like, "Hey, not only after
you retire it's not smart. But even before you retire." And many
people who learn this begin to do a strategic roll-out out
of their IRAs and 401Ks. So, what is the premise or the original
premise behind advising somebody to contribute
money into an IRA or 401K, the traditional ones?
It was usually, "Oh, you're going to be in a lower tax
bracket when you retire. So, it would be better
to put money in pre-tax." See in IRA, you put in contributions and
you get to deduct what you contribute off of your tax
return off your income. With a 401K, which is usually sponsored through an
employer, you're actually putting in pre-tax dollars.
So, you're putting in tax advantage dollars on the front
end. What I call the seed money. Because I've used an analogy for years the
farmer and the seed .iI you were a farmer and you had the choice of buying your
seed, let's say in the springtime, the seed money going into your retirement
plan. And you didn't have to pay tax on what
you paid for the seed. And you could cultivate water, irrigate
work hard. And then in the fall, when you're ready to harvest,
so the fall of life would be retirement. When you're ready to harvest the money
out of your ira 401ks, now you agree to pay tax on what you
sell your harvest for. Well, way back 30-35 years ago,
a lot of people when they retired were in lower tax
brackets. That has not been the case, it has not been true or axiomatic now
for more than 25 years. People are usually
not in lower brackets unless they didn't save very
much. Is that why you want to be in a lower bracket? Why? Because they were sort
of killing their deductions along the way
paying off their house. You no longer have that deduction usually in
retirement. The kids are not home anymore.
Or if they are, you can't deduct them anymore if they're adult children living
with you. Business owners don't have those
deductions anymore. You're not contributing money in retirement. Usually
to IRAs at 401Ks, you don't have those deductions anymore
and congress keeps raising taxes. And so hello? Most audiences that i talk to when
i say, "How many of you think future taxes in the long run
are going to be lower?" I get nothing but crickets.
How many think they're going to be the same? One or 2. How many think they're
going to be higher? And a sea of hands goes up. I go, "Then why are you
continuing to postpone, defer, procrastinate paying tax until your
account grows like this to some future-perceived, unknown
advantage. And now you're going to withdraw your money when you have this
much money and pay tax during the harvest?" I would
rather pay tax on the seed and enjoy the harvest tax-free. Now, you
may think that's a Roth. A Roth is okay it's a step in the right
direction but it still has too many strings attached that's why i have never
owned a Roth and I never will. What are the strings?
You can only put in a certain dollar amount, a certain percent. If you make too
much money you can't even have a Roth. My favorite vehicle which I
call The Laser Fund, which is a max-funded indexed UL which
I have earned an average of of 7 to 10 percent
net cash on cash tax free for the last
26 years. And for the last 45 years, I've averaged 8.2%. Indexing
came out in 1997. That's not index mutual funds. That's
another topic that I cover on this YouTube channel.
But folks, that will knock the socks off of a Roth or an IRA or 401K.
Just like a Roth, you fund it with after tax dollars. You accumulate your money
tax-free, you can access the money tax-free. But
there's 4 additional benefits that it has that a Roth will never have.
What are they? I can put in after tax money into my
Laser Fund. Now, laser is an acronym that stands for liquid assets safely
earning returns. And you can learn on this
channel about what a Laser Fund is. In fact, at
the end of this episode, I'll show you how you can get a book called The Laser
Fund that will change your life financially.
But basically, the 4 additional advantages i have in
a laser fund over a Roth is i can put in a huge lump sums. You
can't do that in a Roth --you're limited. If I have a banner year, I could put in
300,000. I could put in a million dollars if
I'm a business owner. Now, if i can put in 300 and I don't. If I
only put in 30,000 then I have 270,000
of room that i didn't use. If a tax year goes by with a Roth, if you don't
use room allowed by the government, you lose
it forever. If you don't use it, you lose it. With a laser fund, I can put in that
270,000 of room in the second, third, fourth,
fifth year, anywhere down the road. I can make up for years that i didn't
max it out. You can't do that with a Roth. But here's
another advantage: If I put in 300,000 and a month later,
I needed to access 250,000 of it for some business
opportunity or whatever, I can do that, You can
not put money in a Roth and touch it for 5 years or
age 59 ½. You have to wait. With the laser fund, I can put money
in, I can take it out. And you can learn how to do that
on this YouTube channel. But with my laser fund,
i get to use indexing. In a nutshell, Indexing means
when the market goes up, I benefit. But my money is not
invested or at risk in the market. So, I have earned
16%, 25% even even 55% tax-free using indexing.
But when the market goes down, I do not lose because my money is not
at risk in the market. This is powerful. I want you to learn that and i'll show
you how to get a book where you can understand this.
The last advantage is if I happen to die... Because sooner or later all of us are
going to graduate, right? If i die tomorrow, every million in my
portfolio of laser funds would immediately blossom to 2.5
million and transfer income tax-free to my spouse, my kids, my grandkids or
a charity of my choosing. There's not a Roth around that will do that. And when
people say, "Well, how much does that cost?" The way, I
structure it, nothing. Now, nothing is free but i'm not
paying for it. You can learn how it's paid for with
otherwise payable income tax that most people shell out on
IRAs and 401Ks. Would you like to learn more? So, I have
helped thousands of people take ownership for
their own retirement in something far better than an IRA or
401K or a Roth. And so that's why my advice is before you retire or
even after you retire, I do not think putting money into an IRA is smart
when there's something far smarter to put your money into. Now, it's called
The Laser Fund in this book. It's my latest best seller. It's my 11th book.
This is 300 pages. And the first 200 pages are for you left-
brain thinkers. You like the charts and the
graphs and the numbers. But a lot of people learn by stories and
examples. So watch, you flip this book over and this is the
second book. And this is about 100 pages, 12 chapters
with 62 actual client stories of how it works.
There's even stories in there explaining when it didn't work and why
it didn't work. So, this isn't for everybody. But my
heavens, you need to learn about this. You know, the book retails for 20
bucks. I'll show you how to get one for free here.
I will pay for the book. Now, you simply go to laserfund.com. Claim
your free copy of this book and i'll fire it out to you.
You simply pay $5.95 shipping and handling. To be honest with you, that
doesn't even quite cover the cost of the shipping and
handling. But I want this information in your hands.
There's options in there if you want to learn additional things
visually or the audio version. And so, my invitation is for you to claim
your free copy by going to laserfund.com. And then you can learn more about
something that I think is far better than any IRA or 401K
or Roth that you could show me.