This is step number three out of five critical steps you should take before retiring.
My name's Doug Andrew, I've been a financial strategist and retirement planning specialist now
for more than four and a half decades and years ago I developed a course called retire by design
and we would teach this to thousands of attendees of people about to retire at live events all
over America. I've also recorded it in an online course and even though I think it retails for 297
dollars. If you stay until the end, I'll show you how you can get an online version of this five
and a half-hour course that I would recommend that everybody watches before they retire.
Absolutely free. With this course, there is a 40 page workbook and it's called retire by design.
This particular episode is step number three of five critical steps. The very first step, if you
haven't watched that episode it's talking about getting the big picture getting clarity on the why.
The second step is doing strategic tax planning and getting money repositioned out of traditional
accounts like IRAs or 401ks with the least tax impact and repositioning that money into something
that's going to be tax-free from now on. So this is step number three and this is how to diversify
to create a tax-free retirement and it's what I often recommend that 40 to 60 percent
of a person's income in retirement shouldn't even show up on their 1040 tax return. The IRS
knows they're receiving the money and they know it's totally tax-free.
So, what is this? Let me give you a few highlights of this and if this intrigues you
then I would encourage you to read my most recent best-selling book the laser fund.
Which I'll gift you at the end of this episode or that you actually then qualify to get a copy of
the full five and a half-hour online course retired by design and you can get the 40
page workbook. So, here we go, when we choose the right financial vehicles for retirement
at retirement planning is something totally different than maybe what you did for retirement.
This is why in the last episode step number two we introduced strategic rollouts. This is not a
rollover. This isn't rolling money over from a 401k into an IRA and continuing to delay the inevitable
until you're 72 and then taking out RMDs required minimum distributions. Frankly, that's the worst
advice I've ever heard for most people given to them by CPAs and tax advisors. So, you want to make
sure you reposition money based upon increasing the liquidity, the safety, the rate of return, on
the tax benefits. Those are the key elements of a prudent investment and you can learn more about
those in the book or in the five and a half hour course. So, this is where my favorite vehicle
I call the laser fund is the green bucket it's tax free income. How to accumulate access and transfer
your money tax-free? So, I've been doing this again for north of 47 years. There are three types of
income that Americans pay income tax on in America ever since 1986 tax reform. That was when president
Reagan was serving his second term as president. Earned income, passive income, and portfolio income.
Now, earned income would be like salaries and wages. Passive income would be like rental income
or lease income. Portfolio income would be like interest and dividends. If you have income that
is not under one of these three umbrellas there's nowhere on a 1040 tax return to put it. It's that
simple, it's tax-free and so the laser fund is not one of these three types of income. When you have
a million dollars in a laser fund it can generate 80,000, 90,000, a 100,000
a year of tax-free income and people say, "Why is it tax-free?", well, you'll learn the history
behind why it's a sacred tax-free cash cow in the internal revenue code for over 107 years.
But if I just cut to the chase because it's not deemed earned passive or portfolio income.
The IRS knows people receive this money and they know it's tax-free. It's not even worth auditing
because it's never been taxable for over a century okay and I'll introduce to you the three sections
of the code that have been grandfathered for over a century to make this a sacred tax free
cash cow. So, EF Hutton back in 1980 realized that even though they were a brokerage firm one
of the safest places to have money or the safest financial institutions. The best money managers in
in America were they multi-trillion-dollar legal reserve insurance companies. In fact, they're not
only the backbone of America but the backbone of the world and when you accumulate money or cash
value inside of an insurance contract it is the only instrument in the internal revenue code that
allows you to accumulate the money tax-free under section 72(e). Because you're taking pressure off of
the government to provide for your family if you happen to die. But that's for people who are
using it for death benefit. EF Hutton said, "Wait a minute, why don't we use it for living benefits? Why
don't we take the least amount of insurance the it will let us get away with and let's put in the
most money the IRS allows as fast as they allow and use it for tax-free income?", it was incredible
and that's because of section 72(e) the money grows tax-free. Now, section 7702 of the code dictates
how you can access the money tax-free so that with laser funds for example usually every million
dollars you accumulate can generate 70, 80, 90, 100, thousand a year of tax-free income. If you live to be a
120 years old without depleting principle based on actual history. That comes under section 7702.
Now, when you ultimately do die section 101(a) says anything left behind in the insurance
contract that you didn't take out to live or retire on will actually transfer income tax-free
but it usually blossoms it increases in value. I'll just say this I'm 69, if I died tomorrow every
million I would have in my portfolio of laser funds would blossom right now to about two and
a half million and transfer-tax-free and people say, "Whoa, how much does that cost?", well nothing's
free but it doesn't cost me anything. It's being paid for with a miniscule portion of money that
would otherwise go out the window in unnecessary tax if I followed the herd and kept my money in
IRAs and 401ks like most Americans are duped into doing. There's three tax citations that you'll
learn about in this retire by design or in my book and it's called Tefra Defra Tamra. Don't get
hung up on these acronyms you'll learn what they mean. But these two actually dictate the minimum
amount of insurance that has to be attached to the account so that the money grows tax-free
and you can access it tax-free that it stays protected in these three sections of the code.
If you violate Tefraand Defra then it moves out of the tax-free sections of the code over to taxable
investments and usually taxable investments they're taxed sooner or later like IRAs & 401ks.
It's usually subject to market volatility. I don't want market volatility to affect my nest egg and
I want it to stay tax-free so I adhere to this by adhering to the Tefra and Defra tax citations.
You'll learn about them in the course. Tamra is the technical and miscellaneous revenue act of 1988
and it basically says that you cannot fund this any faster than four years in one day if you're
over age 50. If you're under age 50 you could do it in three years in one day. I'll explain sort of
what that means here next. I've often talked about the merits of Tefra and Defra where you're squeezing
down and taking the least amount of insurance you can get away with. But these two tax citations gave
parity meaning equality. Meaning, that it doesn't matter if you're a 20-year-old athletic marathon
running female or a 60-year-old or a 79-year-old. I'm thinking of a friend of our family who had
three blocked arteries adult-onset diabetes and a prostate cancer episode. All of us can
utilize these three sections of the code so where the cost of the insurance is the same
for the 79-year-old as the 20-year-old because the amount of insurance required under Tefra and Defra
gets smaller as you get older. You wouldn't believe how many financial advisors don't understand what
I just said. So you'll learn more about it in the retire by design course. Tamra again says
how fast we fund it so that we can have tax-free income forever after. So I usually compare this
metaphorically to a bucket. Now, before I go into this metaphor if this is intriguing you. I would
recommend you share this video again this is step number three of five critical steps that
I recommend in this five and a half hour course called retire by design. Subscribe to the channel,
share it with somebody, click the little bell so you'll be notified every time I post
a new educational video like this which I do almost on a daily basis. But stay with me to the
end because I want to gift you a copy of my most recent 300-page bestselling book the laser fund
and by going through that portal you'll then be able to gain access to the five and a half hour
online course retired by design absolutely free when you attend one of our educational webinars.
Okay, let's go back to this metaphor. You're designing a maximum funded indexed universal
life insurance contract to be used primarily as a living benefit like a bucket. You want to design it
to accommodate the amount of money you want to be grandfathered to be able to put into it. You don't
have to put all that money in but you can't put in more than that. So, you're doing this so that
all of the interest all the growth on the money is totally tax-free under the sections of the
code that I talked about. Now, if you're a male age 60 for example and you wanted to be grandfathered
to be able to put in a half a million bucks. You don't have to put in a half-million but
the fastest you could do that under Tamra would be a hundred thousand dollars the first year and then
another hundred then another hundred. It would take four years and one day into the fifth year
to get your 500,000 in. In actuality now it's possible to get that money in even a little bit
faster under tax law changes that were made December 27th of the year 2020. The point is this,
I could buy a ton of insurance for 500,000 but that's not the objective. I want the best
internal rate of return on this the least amount of insurance under Tefra and Defra is a million
two fifty. That means I put in a half a million in compliance with Tefra Defra and Tamra.
Yeah, there's a spigot on this bucket which is the cost of the insurance. It's draining out a little
bit of the cost of the insurance that's actually watering a money tree. That's going to blossom
to this amount or higher when you pass away. But when I put in 500,000
in adherence to Tamra that half a million based on actual rates of return seven to ten percent
is going to double every seven to ten years. A half a million will double to a million, a million
doubles to two million, two million doubles or four million, four million doubles to eight million. We
have many people who started out with 500 grand 30 years ago that now have 8 million tax-free
and that 8 million is generating 600,000 to 800,000 a year of tax-free income, it's amazing.
It's because they designed this correctly under Tefra Defra & Tamara guidelines.
You will want to learn about how to do this for yourself so that you don't miss the boat. So I've
been doing this for more than 45 years and the reason why I like the laser fund is because it
passes what I call the liquidity, safety, rate of return test, and tax advantages, with flying
colors. That's the four pillars on the front of the book. On a scale of one to ten you can rank
any investment based upon liquidity safety rate of return on tax benefits. You're going to see
that most investments only score like 18, to 20, 22, out of 40 possible points. The laser fund is the
only vehicle that scores like 33 to 35 out of 40 possible points. Nothing's perfect but
the laser fund knocks the socks off of traditional investments that most people use for retirement.
So, folks, this is like a five-story building that I've been talking about
and if the IRS said, "Hey, you can build a five-story building", but let me tell you if
you will just rent out the first floor of the first year and then you can fill up the second
for the next year the third floor and fourth year. If you'll do that all the rental income
the rest of your life will be tax-free. Sounds silly, doesn't it? But that's what Tamra means
inside of an insurance contract. When you adhere to filling up the bucket in accordance with Tamra in
five relatively equal installments four years in one day this turns into a tax-free cash cow. Learn
how you can do this. So, let me show you how you can get a copy of the book and also the workbook and
be able to get the online course retired by design absolutely free. When you understand this concept
and how to be able to incorporate a bucket or several buckets we have some clients that have
17 of these buckets they diversify by using superior vehicles. Then you'll be able to learn how
to create the foundation for a tax-free retirement. So, here's how you can claim your free copy. If you
go to laserfund.com... or click on the link below. You contribute a nominal amount towards
the shipping and handling I'll cover the rest of that cost. I'll pay for the book I'll fire it out
to you. This is 300 pages with all kinds of charts graphs and explanations and 62 actual client
stories of people who have used the laser fund for all kinds of financial goals that you're going to
learn about in the next episode the critical step number four out of five steps. But also,
when you go in and claim your free copy you'll go into our database. You'll be able to attend
our educational webinars and when you do that then you'll have the opportunity to receive free
the five and a half hour online course retired by design and you'll be able to have this 40 page
workbook that will take you much deeper into these concepts that I'm introducing in this overview
of the five critical steps. So, claim your free book and we'll see you for your brighter future.