- A max-funded IUL is far superior to IRAs and 401ks,
and even Roth IRAs and 401ks.
Get ready because at the end of this video,
you're going to gain insights
into how a max-funded IUL policy eliminates the dangers
of taxes, inflation, and market volatility,
which are the three biggest dangers that cause most people
to outlive their money when they follow the herd,
putting money into traditional IRAs and 401ks.
You are going to see how you can double your money
every seven to 10 years, and every million dollars
that you accumulate can generate seventy thousand,
80,000, a hundred thousand dollars a year of tax-free income
for as long as you live based upon actual history.
(gentle music)
So I'm Doug Andrew, I've been a financial strategist
and retirement planning specialist now
for more than 48 years.
And one of my favorite financial vehicles
to accumulate money tax free, not just tax deferred,
and then later on generate tax-free income.
And then when you ultimately pass away,
it blossoms and increases in value
in transfers tax free,
is a max-funded indexed universal life insurance policy,
structured for living benefits even more than
for the death benefit.
Now, I have a lot of episodes on this channel,
3 Dimensional Wealth, that explain how this works.
So be sure and search the channel
if you do not quite understand this,
but I'm going to jump into why so many people in preparation
for retirement choose to put their serious cash
that they're socking away for the future like retirement
into max-funded IUL rather than into IRAs and 401ks
or even Roths.
So there's a lot of considerations when you are thinking
about retirement because there's three big dangers
that cause most people to outlive their money.
One is taxes.
Now, as of the recording of this episode,
President Joe Biden is in office,
but it doesn't matter if he's no longer in office,
politicians, especially tax revenuers,
off times will raise taxes
and they do this to fund their initiatives.
So for example, during the Biden administration,
he was increasing income taxes,
not just on the high income earners, but doing an indirectly
by changing the way that you contribute to a 401k.
For example, usually if people contributed, let's say 15%
to a 401k and they made a hundred thousand dollars a year,
that's 15,000.
You only had to report 85,000 on your 1040 tax return.
See, he wanted to change that
so that you still reported a whole hundred thousand
and then he would give you a tax credit
if you contributed to a 401k.
But that credit maybe was only 26%,
which was indirectly a tax increase
to people who made middle income to higher incomes.
And so the government giveth
and the government taketh away.
So that's the reduced 401k benefits.
Roth conversions, he wanted to scrap those,
people taking lump sums and converting to a Roth.
He wanted to dramatically increase the Capital Gains tax.
And so, he had to back off a little bit,
but there's all kinds of taxes, capital gained tax,
and then there's the estate tax.
Now, this is where sometimes politicians love
to tax people that are six feet under,
so to speak, because they can't complain about it.
And so he was raising those taxes
from about 40% up to as high as 67%.
The corporate tax from 21% for corporations up to 28%
and people go, "That's only 7% higher."
No, it's actually 33% more.
If a corporation made a million dollars of profit
and they used to pay 210,000, now they pay 280,000
which is 33% more.
A lot of times they can't afford to do
that without laying off people or raising the price
of their goods and services.
And that's one of the reasons why we had inflation go out
of control over 15% during the first year
that Biden was in office.
Raising the minimum wage
to 15 bucks an hour didn't do much good
because it was eaten up at the gas pump
and the hamburger stand with the increase
of the cost of living.
So healthcare, free college tuition,
all of these initiatives, when I ask audiences,
"How many of you think that taxes
in the future will be lower?"
I get nothing but crickets.
"How many think taxes will be the same?"
Maybe one or two hands go up.
But when I ask, "How many of you think
that in the long run taxes will be higher?"
A sea of hands goes up and then I go,
"So why are you postponing, deferring,
procrastinating paying tax in traditional IRAs or 401ks
to some future perceived unknown advantage?
And then you're gonna withdraw your money down the road
when you're convinced taxes are higher?"
That doesn't make any sense.
So this is something that a lot
of people don't realize ever since 1986 tax reform,
the second term of President Reagan.
Americans only pay income tax on their 1040 tax return
on three types of income: Earned, passive,
and portfolio income.
This would be salaries and wages, rents and leases,
and maybe interest and dividends.
If you have income during retirement
that is not under one of those three umbrellas,
there is nowhere to put it on a tax return.
It's tax free.
It's that cut and dry.
That's why my favorite vehicle,
an IUL policy, generates income and it's totally tax free.
It's not a loophole.
It's always been tax free for over 108 years.
Now, when we talk about inflation,
many times when government spends double
or triple what they bring in in revenue, I mean, hello.
If you made a hundred thousand a year
and you kept spending two or 300,000 a year,
how long could you do that before you'd have
to file bankruptcy?
Well, that's what was going on in 2020
because of the COVID-19, they spent double what they made
or what the IRS brings in.
And then they passed all of these stimulus packages.
And so they printed money.
And they continued to print money
to where there were trillions of dollars printed money
that was out there in the American economy,
and that is what causes inflation
if you don't understand that.
So I remember, early in the year 2021,
when there was all this panic,
"Oh, inflation is hitting 4.2%."
CNBC, Barron's, Fox, Bloomberg,
Forbes, The New York Times, Market Watch.
And they were panicking.
Well, later on they said, "Oh, inflation's at 5.8%."
And I just rolled my eyes.
Back in the early eighties, right after the Carter years,
I started in 1974, inflation got to double digit,
it topped out at 14%.
The federal government decided they couldn't afford
to pay social security recipients the actual cost
of living increases called the CPI or consumer price index.
And so they changed the way they report inflation.
Instead of apples to apples, a basket of goods
to the same basket of goods a year later,
it was like apples to oranges.
They can actually compare the price
of filet minion's steak last year to hamburger this year
'cause it's still red meat.
Yep.
And so the actual rate of inflation
in the year 2021 was over 15%,
but they reported it was only 5.8%.
So whatever they tell you, you can almost triple it.
Well, people can't afford to keep up
with 20% inflation rates.
And some of the items like gasoline, used cars,
many groceries went up not only 20%
but 50% and even double in some states.
So inflation is the second thing
that erodes away people's purchasing power.
At 15% inflation, you divide that into 72
and the cost of living will double every five years.
So let me show you this.
When people, I think, get duped into putting money
into tax-deferred IRAs and 401ks, they would come
to me at retirement and I would ask them
to bring their after-tax IRA, 401k statements.
And they'd go, "After-tax?"
I knew they didn't have it.
So, "Oh, I'll calculate it for you."
Because they would look at their nest egg,
and if it was a million bucks, I would go,
"That's not all your money."
You think it looks
like this sumptuous hoagie subway sandwich depicted here
on the left.
After you pay tax, after Uncle Sam gets his share,
and 41 out of 50 states has a state income tax,
it looks like this unappetizing sandwich on the right.
Yeah, a million dollars in an IRA or 401k,
only about 650,000 of it is your money.
The rest belongs to the government.
If that million dollar nest egg was earning 7.2%,
you could pull out 72 grand a year,
but you're only gonna have a net of 48,000
to buy gas and groceries, prescriptions,
and golf green fees.
And so if this is already bothering you a little bit
and you think, "Oh, golly, I know somebody who ought
to watch this," be sure and share this.
Post a comment, click like.
But most importantly, subscribe to this channel.
It's free.
And click that little be when you do
so you'll be notified every time I post a new video,
which I do almost on a daily basis.
So when people look at these accounts,
sometimes I would ask them,
"Were you planning your retirement or Uncle Sam's?"
So Time magazine, back in 2009 had this front page story,
"Why it's time to retire the 401k
and do something better instead."
The author of that article, Stephen Gandel, said,
the truth of it is the 401k is a financial flop,
a rotten repository for our retirement reserves.
Why?
Because for the second time in a decade,
in 2008, people lost 40% in the value
of their IRAs and 401ks in America.
And when you lose 40%, you have to have a 67% gain
to make up for a 40% loss.
If a million dollar nest egg goes down
to six hundred thousand, 600,000 has to grow
by 400,000, 67% to make up for a 40% loss.
And it takes usually four or five years to do that.
And that happened twice in that decade.
Now, people using my favorite vehicle, a max-funded IUL,
they didn't lose a dime in 2001 to 2003
after the 9/11 terrorist attacks,
nor in 2008, they were cheering.
"Go, go!"
'Cause they didn't lose a dime.
They may not have made very much in 2008,
but the very first 90 days of 2009,
most of them locked in gains of 16% tax free
after not losing a penny in 2008.
They ended up with double or triple the money.
So stay with me here, I want to gift you a book
at the end of this episode.
Sometimes I feel like this guy who has all this artillery,
this machinery, automatic weapons,
and people are fighting the battles
of life with swords and shields,
and I'm saying, "Hey, I've got ammunition here,"
and they go, "I'm too busy to be talking
to some crazy salesman, I've got a battle to fight.
I need to make sure my money doesn't run out before I do."
And I'm going, "That's what I'm trying to show you here."
Well, how much is a trillion bucks?
That's $1 bills lined up from here
to the moon and back 200 times, that's 1 trillion.
The government has been printing that much a month.
Now, sometimes things like social security,
the government owes 130 trillion
in future social security Medicare benefits
that they don't even have.
If they stopped withholding from people's paychecks,
they would be broke in nine months.
So the message is, we're in trouble
because the government has to keep printing money
and raising taxes.
So it's sort of like a sinking ship.
And sometimes Congress, I think, is rearranging deck chairs
on a sinking Titanic.
And they don't realize that that ship is gonna sink
because if your outgo exceeds your income,
your upkeep will become your downfall.
That's not just with your personal budgets,
but with government.
So I want to help you board a life boat
so you stay afloat financially if the U.S.S. Economy sinks.
And I'm gonna show you how you can do that.
And I want to give you a copy
of my book to help you understand this
at the end of the episode.
Uncle Sam is gonna have to take a bigger
and bigger piece of the American taxpayers pie.
And so many people, when they look at their IRAs or 401ks,
they don't realize the negative impact of time.
T I M E.
Taxes, inflation, market volatility,
and economic uncertainty.
I feel you must have a vehicle that passes the laser test.
Laser means liquid assets safely earning returns
that are equal to or greater than the inflation rate
at any given time, which I've been blessed to do
for over 48 years with my serious cash.
So sometimes people look at their 401k
and they start realizing it's not the cats meow
they thought it was.
So what do you do?
Rule of 72 says this.
If you were to earn 7.2%, where did I get that number?
Well, it's convenient because the worst decade
since The Great Depression, 2000 to 2010,
it's called The Great Recession,
most people went through that whole 10 years
and their money went down by 40% twice,
and they weren't even back to break even.
Whereas people using indexed universal life,
they earn 7.23%.
And that's without rebalancing.
When they rebalance, they actually earned over 10.
So at 7.2%, you divide that into 72,
that tells you your money will double every 10 years.
So that means if you started out with 125,000 year one,
it would double to 250,000 in 10 years, 500,000 in 20 years,
and a million in 30 years.
I've had many people realize that.
It's just math, it's compound interest.
Well, let's say that you have a million dollar nest egg,
earning 7.2.
And so, you pull out the interest
'cause you don't wanna deplete your principle.
That's 72 grand.
In a tax-deferred IRA or 401k, in a 33% tax bracket
between federal and state tax, you have to pay 24,000,
a third of 72 in taxes.
You're netting 48,000 to buy gas,
groceries, prescriptions, golf green fees,
whatever you like to do in retirement.
That's 4,000 a month.
People say, "Mm, if we tighten our belt, honey,
maybe we can get by."
Well, then what happens?
If inflation is 5%,
five into 72 tells you the cost
of living will double every 14.4 years, every 15 years.
So 4,000 a month in less
than 15 years will only buy what 2000 a month buys today.
You're gonna need 8,000 a month in 15 years
to buy the same gallons of gas and loaves of bread
that 4,000 a month buys today at 5% inflation.
That's 5%.
What about inflation at 7.2%?
In 10 years, you'll need twice as much.
10% every 7.2 years.
12% every six years.
But inflation has been over 15% as of the recording
of this episode, that means in 4.8 years,
less than five years, you will need 8,000 a month
to buy what 4,000 a month buys today.
And in another 4.8 years, less than 10 years
from today, you will need 16,000 a month
to buy what 4,000 a month buys today.
So what's the solution?
It's a max-funded IUL
because it helps you outpace inflation.
So the three biggest dangers that cause most people
to outlive their money:
Rising taxes, inflation, and market volatility.
I eliminate those dangers
for my clients with three opportunities.
You wanna switch to tax-free vehicles, which an IUL is.
You wanna link your returns to the things that inflate.
So if inflation's at 10, you'll earn maybe 15 like I have
so that when the market goes up, you benefit,
but when the market crashes, you do not lose.
And you need to search this channel on how that works
or I'm gonna show you how you can read
and study about indexing.
I'm not talking about index mutual funds.
The reason why I like max-funded IUL is
because it passes the liquidity, safety,
and rate of return test with flying colors.
Hence it's called a laser fund,
liquid assets safely earning returns.
So here's how you can claim your free copy
if this is intriguing you.
Simply go to laserfund.com
and you contribute a nominal amount towards the shipping
and handling.
I'll cover the rest of that cost.
I'll pay for the book and I'll fire out a hard copy to you.
It's 300 pages.
And you will have all kinds of charts
and graphs and explanations.
And when you flip it over, there's another 62 stories
on this side.
But this will empower you
and then there's options there to listen
and learn and watch and learn.
But claim your free copy now by going
to laserfund.com and I will see you
on the brighter side of your amazing future.
(gentle music)