Is this too good to be true? In this episode, we are going to address indexed
universal life retirement hack. So, my name is Doug Andrew and I've been a
financial strategist, retirement planning specialist for more than 45 years. I'm
here in my radio studio. I've been blessed to have a national radio show
for the last 11 years. I also have this YouTube channel where I love to post an
in-depth answer to a financial question every single day. And so, you're on this
page here because you were curious about indexed universal life or what we call
IUL. And it's a retirement hack. So, I'm going to share with you why I think this is
the superior vehicle. My favorite of 4 resources that most people draw from
during retirement. And why it's my preferred vehicle that I would recommend
40 to 60 percent of your retirement income comes in a tax-free
mode out of a maximum funded indexed universal life insurance contract. And it
knocks the socks off of traditional IRAs, of 401Ks
usually invested in the market. When I would help people for their retirement
planning, many times I would just simply say, "What is your goal?" Well a lot of
times they wanted to be financially independent. Some people said, they wanted
to be rich. But when it really got down to it at the end of the day at
retirement planning. If I ask somebody, "So, are you still trying to be rich? Would
would you prefer to be rich or to be guaranteed or assured that you would
never outlive your money? That you would never be poor." And they would choose that
one. So, I said "Well then, there's no question that a max funded IUL is
probably the best solution." Because most other traditional accounts in the
financial services industry, people are out living their money due to market
volatility, taxes, inflation. They have inferior financial vehicles. And so, I
needed to teach them about why this is far better than putting your money into
a tax deferred IRA or 401K or maybe into an annuity. So, I'm going to share with you
the 4 phases of retirement planning. And why this is by far the best choice
for serious cash for the long run. So, I will also ask this question, "Do you think
it's more important that you choose investments based upon which one's grow
to the most?" Or do you think it's better to choose investments that will generate
the most net spendable retirement income that will last the longest. And people go,
"Oh, well. Isn't that the same answer?" I go, "Nope." You want to choose the investment
vehicles and the strategies that will generate the most money at the time in
life you're gonna need the money the most. And so, it's always not necessarily
a vehicle that will grow to the most. Because a lot of those rely on the
market doing certain things. And if you need predictable income, the market is
nothing but unpredictable. So, let's go through these 4 phases of retirement
planning. The first phase is the contribution phase. This is where we
contribute money into account to accumulate for our future. So, the
contribution phase. And you can get tax benefits on what you contribute. Or you
can go ahead and fund it with after-tax dollars. Now, the next phase is called the
accumulation phase. So, this is where your money is hopefully growing with interest
or dividends or what-have-you gains. And that you can get tax advantages as it
grows instead of paying tax as it is earned. Now, the next phase, phase 3 is the
distribution phase where you take withdrawals out of your savings accounts.
Most people go into withdrawal when they hit this phase. Because they didn't
realize the amount of tax they would start to pay on those tax deferred IRAs
or 401Ks. They were always told, "Oh, don't
worry about it now. You'll be in a lower tax bracket then." And lo and behold they
weren't in a lower tax bracket. And they go, "Hmm, that wasn't the smartest way to
do this." So, the distribution phase maybe is the most important because we set
aside money to use it down the road. But then there is the transfer phase. This is
whatever's left behind when you pass away. And who you leave it to... Maybe your
spouse your children. And so many times, many financial vehicles do not have a
provision to continue to bless the lives of those you leave behind. Because most
of us leave behind something that would have sustained us had we lived longer.
And so, what I did years ago is I analyzed all kinds of different ways to
save money based upon those 4 phases --contribution, accumulation, distribution
and transfer. I found that there were 5 basic methods that most Americans
saved money. So, here we go. I found that most Americans were saving the worst way.
That means they were taking after-tax dollars, they were working and earning
money and of course they would pay tax on that. And they took after-tax dollars
and they would put it into inferior vehicles like savings accounts at banks
and credit unions earning less than 1%. The rowing upstream at the rate of one
mile an hour on their money while the current of inflation is coming down at
3, 4, 5, 6, 7 percent. They're going backwards. But see, they
were putting their after-tax dollars into the bank or credit union or even a
mutual fund. And then every year, they would get a statement and they would
have to pay tax on the interest or the dividends. That is the worst way to say
taxed as earned. I can prove it to you because a dollar doubling every period
for 20 periods will grow to a million $48,000 if it's tax-free. If it's taxed
as earned in a 25-percent bracket, it's only worth somebody 2000. If a dollar
doubles to $2 and you pay tax of 25 cents,
you only have a buck 75. A buck 75 doubles the next year to 350. You pay tax
on that. See this is how most Americans say. You'll only have 72,000 instead of a
million. In a 33-percent bracket, you'll only have $27,000, not a million.
2.7% of what you could had. And yet that's the most common way Americans
save. Now, the next would be tax-deferred. You take after-tax money and you put it
into a tax-deferred investment. The most common would be an annuity. And in an
annuity, it just simply defers until you take it out. And when you start taking
income, its tax LIFO. That means last in first out. So, if you had a half a million
in there and let's say it's earning 10%. Most annuities don't pay that much. But
let's give them the benefit. 10% on a half a million would be 50,000 a year.
But see that 50,000 is 100% taxable. Even if it's not an IRA or 401K because the
last money you're earning, the 10% interest on the half a million is the
first money coming out. Last in, first out. And so, you're taxed the rest of your
life until you start depleting the principal. And most people don't want to
do that if they can help it. That's like if you were going around a racetrack and
the goal is to have a million dollars, the million dollar dash, putting your money
in taxes earned investments would be like crawling. Putting after-tax money
into a deferred annuity would be like walking around the racetrack. Now, many
people get convinced that a an IRA or 401K or a Roth is a good way to go. A
traditional IRA or 401K would be like jogging around that racetrack. You're
using pre-tax dollars around the first part of the race. But at the at the end
of the race, retirement, now you're running against the wind. You have to
pay tax. And people didn't realize they would be in a higher tax bracket. So, it's
like jogging with the wind at the back of the beginning of the race but at the
end of the race. You're having to pay tax on all that and people are out living
their money. Because they never dreamed they would have to pay that much in tax.
If you have a Roth, that's like jogging with the wind at the back at the end of
the race. You fund it with after-tax dollars but you enjoy the money tax-free.
It accumulates tax free. And it's tax-free during retirement. I could prove
to you mathematically that if you earn the
same rate of return on the exact same amount of money in a Roth as an IRA or
401K, there's no difference if you think tax rates are going to stay the same. But if
you're like most Americans and you're convinced tax rates will likely be
higher in the future which most people, oh, no. Taxes will likely be higher. If
they go even at the lowest level, that the general Accountability Office
estimates they'll go to like 50% taxes. The Roth will generate 33% more in net
spendable income then a traditional IRA or 401K with the same amount of money,
the same rate of return. And yet 91% of Americans are
duped into putting money into a traditional IRA or 401Ks. Now, having
said that, I don't own an IRA or 401K. Never have, never will. But I don't own a
Roth never had, never will. My favorite vehicle is called the Laser Fund, indexed
UL. And the reason why I call it a retirement hack is because it has the
2 benefits of a Roth. You fund it with after-tax money. But it accumulates
tax-free, you can access it tax-free. But I have 4 additional benefits that
Roth's do not have. So, I am sprinting around the racetrack. I will hit my goal
of a million bucks generating the average that I have for the last
25 years 10.07. 10% of a million bucks is
100 grand a year tax-free. Most IRAs and at 401Ks only generate about
40,000 a 4% payout if it's in the market. What would you rather
have? 40,000 and have to pay tax on the 40? Or would you rather have
80 or 90 or 100 thousand tax-free. But see, I can do that with the
max-funded IUL with four additional benefits. And that's why I
call it the retirement hack, savvy CPAs tax attorneys call it the rich man's
Roth. You don't have to be rich to have one. You see, rich people can't own a Roth.
They make too much money. So, let me summarize this with the key takeaways
the 4 benefits it has and why you are sprinting around that track and why I
call it the retirement hack. What are the benefits? When I use a max funded IUL and
I affectionately call it the Lazer Fund in my most recent book.
I'll show you how you can get a free copy of this book here in just a moment. I can
accumulate my money tax-free and access my money tax-free. I mean, that's been
grandfathered in the Internal Revenue Code for more than a century. Long before
Roth's came around. But I also have 4 additional benefits. I can put in a large
sum of money like 2 or 3 hundred thousand dollars if I create the account
to accommodate that. You can't do that with a Roth. You can't put in that much
money. You're restricted on how much you can put in a certain percent of your
income. But get a load of this. If I put in 300,000. And next
year, need 250,000 back. Or even 4 days later after I put
in 300. If I need 250,000 back, I can access the
money for any reason. There's no IRS penalty for doing that. I've had people
in their 30s retiring with a million dollars generating 100,000 a
year of tax-free income. One 35 year old has 10 million generating a million a
year of tax-free income. He didn't have to wait till he was 59 ½ like a
Roth, okay? But see, if I could put in 300,000 and I only put in
30,000, in future years, I can make up for the 270,000
that I did not put in there. You can't make up for lost years with the
Roth. Once the year is gone, you cannot make up for years. You didn't put in what
you could have put in. And so, I can have flexibility put in large amount. So, I can
make up for years, I don't. I can access money. What's the fifth advantage? Well, I
can use indexing so that when the market goes up, I can benefit. But if the market
crashes, I don't lose because my money in an indexed universal life is linked to
the market. But my money is not at risk in the market. And that's why I have been
able to average 8, 9, 10 percent rate of return on my indexed universal
life contracts for 25 years now. But when we talk about at the end of the
day, when you died, the fourth phase transferred, there is not a Roth around
that will blossom in value when you pass away. Every million that I might have in
a Laser Fund, if I die tomorrow, I'm 68 would blossom to 2.5
million and transfer totally income tax-free.
There's not a Roth around that'll do that and people ask how much does that
cost? Nothing. It's really paid for with otherwise payable income tax that
you would shell out unnecessarily on an IRA or 401K. So, if you're getting the
picture, this can knock the socks off of traditional retirement savings accounts
like IRAs and 401Ks. And that's why I call it the retirement hack. If you want
to learn why and how, I'll tell you what. This is my 11th book. It's 300 pages
containing charts graphs explanations, 62 actual clients stories and examples. And
I want to gift this to you absolutely free. The 300 pages are actually 2
books in one. This is left brain, this is right brain. And you pay $5.95 shipping and
handling. And I'll send you out a copy. Go to laserfund.com.
Laser, fund, ".com". And get a copy and begin to learn. And then check out some of the
other questions that are often asked about indexed IUL. And you can find out
those answers on this channel. And if it's intriguing and you want to learn
more, feel free to subscribe.