- Remove 40 to 80% of your retirement income
off of your 1040 tax return.
In this video educational episode,
I'm going to address
How Much Of Your Income At Retirement Should Be Tax Free.
A lot of people don't think about this.
Get ready, put on your seatbelt, I'm gonna blow you away.
(upbeat music)
So I'm Doug Andrew,
I've been a financial strategist
and retirement planning specialist now
for North of 48 years, helping thousands of people
optimize their assets and minimize taxes,
and prepare for a comfortable retirement
where they hopefully will not outlive their money.
Now, one of the secrets to not outliving your money
during your golden years
is to convert anywhere from 40 to maybe 80% or more,
some people have a hundred percent
of their income at retirement totally tax free.
I'm not advocating that in this video episode,
but get ready.
If you've watched very many of my educational episodes
on this channel, Three Dimensional Wealth,
I'm very passionate about helping people understand
how to accumulate money tax free, not just tax deferred,
and then be able to access that money tax free
even before retirement, if you need it.
But especially during retirement,
to be able to have tax free income.
The IRS will know you're receiving this income.
They know everything,
but they know that it's not subject to tax,
it hasn't been, it's been protected for more than a century
in the internal revenue code.
And so my favorite vehicle to accomplish this
is a Max-Funded Index Universal Life Insurance contract,
that's structured correctly in funded properly,
and this is where I have actually earned average returns
of 9.62% for more than 42 years.
I can show you how to do this.
There's a lot of naysayers that do not believe that,
and I show them historical averages
where I've earned 11% 16, 25, 61%
on my Index Universal Life.
It must be structured correctly and funded properly
to pass what I call the liquidity test, safety test,
rate of return test,
and then tax benefits are icing on the cake.
And so that's why we call it the LASER fund.
Now LASER fund is a properly structured
Max-Funded Index Universal Life
because LASER is an acronym that I have used for years
that stands for Liquid Assets Safely Earning Returns.
So I wanna start out here
with a story of a couple that came to me.
They lived in the San Francisco Bay area.
The cost of living there is much higher
and many of them have accumulated 2, 3, 4, 5 million dollars
in their IRAs and 401ks and the like,
and so this couple they came,
and they were proud of themselves and I congratulated them,
and they had accumulated about 2.7 million
in yet to be taxed IRA, and 401ks.
And I looked at it and they could tell that I was concerned
and they said, well what's wrong?
We feel like we could take about 6% a year
out of this account,
which calculated to be about $160,000 a year.
And then they also had about 40,000 a year
of source of security income,
and a little bit coming in from when they had taught school
for about 10 years earlier in their lives.
And so they had about $200,000 of income
with all of these resources,
but 160,000 of it at 6% payout from that 2.7 million
was all yet to be taxed.
So I said, well yeah the problem that I see
as a tax minimization specialist,
is that a hundred percent of this
is all showing up on the front page of your 1040 tax return.
And they reacted as normal.
Like well, you mean there's another way?
And I go yes.
And so I taught them about a strategic rollout.
This is not a rollover.
This is where we strategically get the money
out of those IRAs and 401ks.
Maybe 40, 60% of it 80% or a hundred percent.
Some people say I don't wanna have
any taxable income in retirement.
And I say well, we're gonna have to pay the tax now
which they agree,
getting the taxes over and done with sooner than later.
If you believe that taxes in the future
will likely be higher is actually very smart.
Most people they get duped I think into
postponing, deferring, procrastinating paying tax
until they're aged 72,
and then they're told to take RMDs required
minimum distributions thinking they're saving tax. No.
When you string it out during your life expectancy,
and your spouse's life expectancy,
and then you leave behind the rest to your children
and they have to pay tax within 10 years
after inheriting that, I can prove to you mathematically,
that is not smart.
And most savvy CPAs and tax attorneys
who have done the math will agree.
So what we did with this couple
is we did a strategic rollout.
So this required that we do a rollout
of about $600,000 a year.
So out of the 2.7 million, we did $600,000 a year,
because they were earning interest as we were doing it.
So we ended up with about 3 million that came out,
600,000 a year times five years is 3 million.
Out of 600,000 even in a 33% tax bracket,
they only netted 400,000 after paying tax.
Yeah it was painful
but they're gonna pay the tax sooner later,
and they realized they would likely be in a higher bracket
or taxes would go up
because of irresponsible government spending,
and the printing of money and so forth.
And so we netted 400,000 after tax
out of every year's 600,000.
And so we had 400,000 times five years
we ended up with $2 million. Where did we put it?
They don't have to spend it,
we repositioned that in the strategic rollout to a portfolio
of Max-Funded Index Universal Life Insurance policies.
And so we ended up with 2 million in those IUL policies.
What I call LASER funds.
Now those LASER funds now are producing a rate of return
averaging between eight to 10%.
But because of the strategies that we teach
in my various books and I wanna gift you a copy,
of our most recent bestselling book
at the end of this video for free.
And so stay with me, but that 2 million,
they are actually letting it grow a little bit
but at 2 million I showed them they can now generate
the $160,000 a year based upon an 8% payout.
So 8% on 2 million coming out is 160,000 a year,
which is what they were going to get at a 6% payout
because they were only averaging actually less than 6%
but they thought they could maybe average 6%
by leaving it in their mutual fund portfolio.
But Wall Street made them nervous, with the ups and downs.
So they want a stability.
A max funded IUL policy will help you benefit
when the market goes up
but you will not lose one dime due to market volatility
if the market goes down.
And you need to learn why that's called indexing
and I'm not talking about index mutual funds.
The end of the story is this.
We were able to now generate $160,000 a year
of tax free income.
They still had their 40,000 of source of security
and a little bit of school teacher pension,
but hello we were able to get 80% of that 200,000 of income
off of their 1040 tax return.
Yeah, the IRS knows they're receiving that 160,000
but it's been tax free in the internal revenue code
now for over 108 years,
and people say where in the internal revenue code?
Well in sections 72E, 7702 and 101A.
Watch other educational episodes on this channel,
you'll realize that money inside of an insurance contract
accumulates tax free under section 72E.
Under section 7702 you can access that money,
in a totally income tax free if you do it the smart way,
and that's what they're doing.
And if they live to be 120,
they'll be able to enjoy 160,000 a year of tax free income.
They can increase it from that if they want also.
And they don't have to pull that out.
There's no required minimum distribution,
but at the end of the day,
anything that's left in there when they pass away
will blossom and transfer income tax free.
That's under section 101A of the internal revenue code.
Nothing else does that that I'm aware of
in the internal revenue code.
So that's the rest of the story. They are so grateful.
Sometimes when I meet with people at retirement
at least five years before retiring,
and they see the wisdom in doing a strategic rollout,
they are so grateful and we're able to get 40%, 60%.
In this story, 80% of their income,
80% of that 200,000 a year of income
we got off of their 1040 tax return.
Sure the IRS knows they're receiving it,
it's not even worth auditing because it's been tax free
for over a century.
So if you wanna learn more
about how to convert as much as 40, 50, 60, maybe 80%,
we did have one couple in California.
We took them from the highest tax bracket
to a 0% tax bracket in five years.
And they're now enjoying 800,000 a year of tax free income.
Technically they don't even have to file a tax return
because they said no, we're sick of paying taxes,
and so they got through paying all the tax,
and now they're enjoying 800,000 a year of tax free income.
Totally a hundred percent, a 0% tax bracket.
So if you wanna learn more,
I mentioned I wanna gift you a copy of our most recent
300 page best selling book called "The Laser Fund."
Now this is actually two books in one.
This white covered side is about 200 pages
comprised of 14 chapters,
with all the charts, and graphs, and explanations,
of how to diversify and create the foundation
for tax free retirement.
If you learn more by stories and examples,
you flip it over to this one,
this is about a hundred pages, 12 chapters,
with 62 actual client stories.
And so it's good for the left brain learner
and the right brain learner.
If you wanna use your whole brain
I would read both of these books.
But you don't have to pay $20 on Amazon for it.
If you do thank you.
But I wanna gift you a copy.
Here's how you claim your free copy.
You simply go to laserfund, L-A-S-E-R fund.com.
You contribute a nominal amount
towards the shipping and handling,
I'll cover the rest of that.
And I will pay for the book.
I will fire out a hard copy to you.
There's also options when you're in that website
to listen and learn if you'd rather or watch and learn.
There's a masterclass in there.
There's also notices of different educational webinars
that we do and you can even schedule to talk to
an IUL specialist to see how any of these circumstances
or these strategies can apply
in your particular set of circumstances,
so that you can convert as much of your retirement income
to totally be off of your 1040 tax return.
So here's to your brighter future.
(soft music)