It's never too late if you do this. In this episode, I'm going to
address the question "When is it too late to start saving
for retirement?" Get ready because it's never too late. But the
sooner, the better.
So, I'm Doug Andrew. And what do I know? Well, I've authored 11 books so far.
One, I was blessed to have it become a New York times and Wall Street Journal
number one bestseller back in 2007. That was book number 4.
Recently, I released my 11th book and I'm currently ready to release my 12th book.
In all of these publications, I love to educate people like you and answer
questions such as this one. I wish I had a nickel
for every time somebody has asked in an audience or on a webinar or
a live seminar. "Hey, Mr. Andrew,
when is it too late to start saving for retirement?
I'm 50. I'm 60. I'm 70." And I go, "It's never too late." Now, the reason why I
bring up my fourth book, it was titled
The Last Chance Millionaire, okay? It's not too
late to become wealthy. In this book, which again the second week it was
released we were honored, we were blessed that it hit New York
times the Wall Street Journal number one bestseller list.
And here's why. Back then, there were 78 million baby boomers in America. I'm
one of them. And many of these baby boomers were
feeling like, "Golly!" in 2001 to 2003,
they saw their retirement nest eggs traditionally in the market
lose 40 in value after 9-11. If they had a million dollar nest egg in
the market, they saw that million bucks dwindle down
to 600,000 by the end of 2003. It took 4 years
till 2007 to make back what they lost. And so,
they felt like they had lost their future. They had to put off retirement
7 years. Now, in my book, I talk about how people
during that 7-year period doubled their money,
okay? A million doubled to 2 million instead of losing
and barely coming back to break even. In 2008, most Americans saw that nest egg
dwindling value again 40 in one single year because of the
mortgage meltdown, the crisis. And it took until 2012 to get back to
the break-even point of a million. By then,
many of our clients had tripled their money to 3 million
totally tax free. So, it's never too late. But then people started to pay
attention, "How did you do that?" So, in this book, I actually have 4
couples. I use fictitious names to replace the
actual their real names. Because these are real life stories.
4 couples that we helped accumulate an extra million
dollars in 10 short years by repositioning and optimizing
their existing assets. Money that they were not optimizing as well as they
could. And we generated an extra million bucks
in less than 10 years, actually. And that million dollars predictably
generates $100,000 a year of tax-
free income. In other words, we were able to generate 100,000
a year tax-free. Instead of an ira or 401K,
you would have to have a million and a half dollars earning 10%
to generate 150,000 of income you pay tax on a third of it to
net the same 100,000. So, this was remarkable. And we were so
blessed because so many people that read this book
got empowered and I received thank you notes from all over the country. "Thank
you, Mr. Andrew. You gave us hope. Resurrected our
ability to be able to retire." And in 10 short years from age 60 to age
70, from age 55 to age 65. Many people were
70 and they continued to be in motion
adding value and by age 80, they were set. And so, let me explain to
you some of the critical ways that we were able to empower people
even late in life to not give up. Not say, "Oh, it's too late for me."
No. You can do this. And it starts out by having an analysis done of what
assets you already have that you're under utilizing. So, let me give you some
examples. So I've often said "It's not what you
begin with that counts it's what you end up with."
Many times when i would meet with these people in their 50s, 60s, even
70s, I would do an analysis of their existing
portfolio or their existing assets. And maybe they did get clobbered
due to the market volatility and the recessions. The great recession
that we had in the decade from 2000 to 2010 where they
saw their account values dropped 40% in that decade.
And so, that's why we called it the lost decade. But most of our clients had
tripled their money from 2000 to 2012 totally tax-free.
So, people say, "Well, it's too late", right? "No, no. Let me see where you have your
money currently." So, let's say they had a million and it
was now worth 600,000. Most people have the tendency
to wait until the 600,000 that it dropped down to comes back
to the million dollar value. The high water mark they had. They
want to wait until it gets there before they do anything. I go, "No,
no, no, no. You want to get the money out of that instrument while the values are
less." Why? Because you're going to have to pay tax on that sooner or later.
Would you rather pay tax on 600,000 in your tax bracket? Let's say 33%.
Would you rather pay tax of 200,000? Or do you want to wait till it gets back
up to a million and pay tax more like a third of a
million is 333,000. So, you want to pay tax of 200,000 or 330,000.
Well, what difference does that make down
the road? It's because after you get the taxes
over and done with at the lower values at today's lower rates,
you recapture the gain tax-free. You reposition that money tax-free. So,
for many people, we optimize their assets by doing a
strategic rollout. Getting the money out of their yet-to-be
-taxed IRAs or 401K sooner than later. Over a 5-year period most of the time.
We got the taxes over with in today's lower brackets because
most people realize that your current tax bracket
is likely the lowest bracket you will ever
be in. So, why do you want to keep postponing,
deferring, delaying the inevitable? Procrastinating
and then withdraw your money down the road when most people
that I ask say, "Hey, I think future tax rates are going to be higher because of
irresponsible government spending and the printing of
money and bailouts and and all kinds of stimulus packages." We've
seen that with pandemics, with recessions, taxes
aren't going to go anywhere but up over the long haul. So, it behooves
you to get the taxes over and done with. So, many times, I would reposition money
out of their yet-to-be-taxed IRAs or 401Ks that were in the market. I said,
"Let's get it out of the market. Let's put it at an indexed universal
life where it will be tax free from now on."
And let's recapture the gain and not lose next time the market loses,
if you understand indexing. If you don't, you need to watch
those episodes that explain that. Or I'll show you how you can get a
free copy of my book that explains this. And recapture that gain. So, you
reposition maybe money in underperforming yet-to-be-taxed IRAs
and 401Ks. Sometimes people had real estate, they
thought was going to be their retirement. And when i did the analysis, they were
renting the real estate for a measly 2% annual rate of return.
In other words, people in California might have a house, a 5-bedroom house.
They think, "Wow! It's worth 4 million bucks."
And they're renting it out for 10,000 a month and they think that's
good. That's pathetic. There are 5-bedroom
homes in other cities in this country like Memphis and Orlando
that are worth 300,000 and rent out for 1% of the
value a month. 3 grand a month. If that house in California is really
worth 4 million, it ought to be renting for 40 grand a month.
So, sometimes people were under utilizing their current assets.
And so, we would move with a a 1031 exchange and put them into real estate
in other cities. And quadruple their rate of return. But
we wouldn't take the equity and put it in a new property would put that into
their insurance contracts. And the rental income is doing very well.
But we're taking that 4 million dollars which we
did for one couple. They had a home and it was it
was actually a 5 bedroom home. They originally paid 230,000 for.
And about 35 years later, it was worth 4.6 million.
Well, they were able to get a new home for 600,000
in a retirement community in a different state.
And they paid a capital gain tax on some of it.
But they were able to turn around and put 2.6 million
into a max-funded universal life insurance contract,
indexed universal life. And that is generating over 200,000 year of tax-free
income out of 4 million netting 2.6 million after capital gain
tax of lazy idol equity that was trapped in
their house doing zippo for them. See, there's a lot of
assets people have. It could be real estate equity,
it could be money trapped in IRAs and 401Ks. And thinking they can't tap
into it. Because they're going to have to pay tax.
Hello? You're not saving anything waiting. You're delaying the inevitable. Or you
wouldn't believe how many people have a half a million
or a million bucks sitting in a bank earning 1%.
And I go, "What's that doing in the bank at 1%?" "Well, we want
it safe." I said, "Safety of principal or safety of
the institution? Why don't you increase the safety
of the institution by 6 notches higher by putting it where the bank is putting
your money?" They put 30 to 40 of their tier one
assets into legal reserve insurance companies. BOLI,
bank owned life insurance contracts. They borrow our money at 1 and they
earn 5. How much more is 5 than 1? 500%. They make 5
times what they're paying you and they increase the safety by 6 notches
in the safety rankings. And so, when you start
analyzing assets and you go, "Hmm, I can increase the safety and move from 1%
up to 7 or 8, 9,
10 percent?" Yeah, increase the rate of return
the liquidity and the safety with existing assets.
So, a professional, the ones i point my students to,
they look at all your assets. Underperforming,
low-yielding, not as safe vehicles and reposition money in banks credit
unions and underperforming real estate and yet-to--be taxed IRAs and 401Ks, you
name it. And you reposition and put that into something that's going to grow tax-free
from now on. And just like Last Chance Millionaire,
many people within 10 years add another million dollars they would
have never had. But even more important than an extra
million bucks, that million dollars can generate 100,000 a year
of tax free income if they had a million in where they had
it before, they're lucky if it's generating 20 or
30 thousand a year of income. Why not double,
quadruple? Sometimes we have 5 times what people were earning where they had
their money in other assets. That is called asset
optimization. Here's how you can learn more.
So, here's the key takeaways. It's never too late.
But wherever you reposition your assets, you want to increase the liquidity,
the safety, the rate of return and the tax
benefits. That's called the laser test. You want to
embrace and utilize the three marvels of wealth accumulation.
Compound interest, number 1. Tax-free accumulation of your money, number 2.
And then safe positive leverage. You want the ability to own
and control assets with very little or none
of your own money tied up or at risk in that asset.
Where can you learn about those marvels or miracles and the laser test?
It's in my book the laser fund. Now, this book retails for 20 bucks.
I want to gift you a free copy. It's a 300 page book containing all
kinds of charts and graphs and explanations and 62 actual client
stories. The book is 20 retail. I will gift it to
you free. You just go to laserfund.com to
claim your free copy by paying $5.95 shipping
and handling. I'll pay for the book, you pay for the shipping.
There's also options to get the audio and also
videos that will help you understand these concepts.
It can make the difference of having 20 or 30 thousand a year of income
versus $100,000 a year of income in less than 10
years. It's not too late for you.