Roth, IRAs and 401Ks only have two advantages. IUL has
6 advantages. In this episode, I'm going to address the question
"Is Roth IRA good for retirement? Well, I'm also assuming is a rough 401k
good for retirement. Simply put it might be a step in the
right direction. But I've never owned an IRA, 401K, never
will. I've never owned a Roth-Ira, 401K, I never
will. Because an IUL will knock the socks
off of a 401K or IRA. I don't care if it's a Roth or not a Roth. And I'm
going to teach you the 6 advantages that an IUL has
over a Roth.
My name is Doug Andrew and I've been a retirement planning specialist for north
of 46 years. I remember when IRAs first came out.
And I began to realize, "Golly, people are sort of getting duped into thinking that
putting pre-tax dollars into a 401K."
Or when IRAs first came out, you were making a contribution that you tax
deducted off of your tax return off your income.
You're funding it with pre-tax dollars whether it's an IRA or a 401K.
In the traditional sense, the premise was you were going to be in a lower tax
bracket when you retired. Well, that has not been true for over 25 years.
But it's very hard for the financial services industry
to admit uh that was poor advice. But they actually a couple of years ago
said, "Well, most people are not in lower brackets like we thought they would be."
But they don't want to say it very loud because they say a fiduciary is supposed
to look out for your best interest. Well, if they knew you were
going to be in as high or higher tax bracket
when you retired based upon what you've accumulated,
they should be advising you differently. But they don't want to come in and say,
"Oh, this is not a good idea" because it may
look like they've been advising you wrong. Isn't
that sad? Well, in 1997, when the government,
the federal government was hard up for tax revenue, senator Harry Roth came in
with a proposal and said, "You know what? People are getting smarter. They're not
in lower tax brackets when they retire if they accumulate very much money. The
only people in lower brackets are the ones who don't have very much
money." Is that why you want to be in a low bracket, because you didn't save
anything? And he said, they're beginning to realize
it's better to pay tax on the money before
you set it aside. Let it accumulate tax free
and on the back end during the distribution phase,
take it out tax-free. Because most people then will save
taxes because taxes are gradually going up. And so, what happened is he proposed
the Roth. He named it after himself of course,
the Roth IRA. You could roll money out of a traditional IRA or 401K
and you could put it into a Roth-IRA. What did that do?
That triggered tax. That's why they wanted it was for them. They wanted to
have tax revenue. Now, it was a step in the right
direction. But i don't think it's the greatest
thing to do because there's too many strings attached.
It's still a qualified plan. You still can only put in a certain dollar amount
or a certain percent of your income. You have to leave it there for 5
years until you're 59 ½. There's still all these government
strings attached. And so, my favorite vehicle since I began in
1974 because it's been grandfathered in the internal revenue code since
1913 as they max funded universal life insurance contract.
Universal life came out in 1980. But see money inside of life insurance
since 1913 has been a sacred cow. It's the only vehicle that allows you to
accumulate your money tax-free, access your money tax-free. But when you
die, it blossoms and transfers income tax-free.
So, it has the two benefits of a Roth and and some additional benefits. But i like
indexed universal life for these reasons. So, life insurance has had the 2
advantages of a Roth. For over a century, it's been sort of a sacred cow
in the internal revenue code. But I like indexed universal life that
came out in 1997. So, when I put money into an index
universal life insurance policy structured
with the least death benefit I can get away with under IRS rules and put in the
most money it turns into a tax-free cash cow. This is where I have earned
average returns of the last 27 plus years
of in excess of 11%, 11.17 to be exact and I've netted 10.07. Now, that
1% is not taxed. So, that's the cost of the insurance that the
the IRS has to be there in order for it to be tax-free
grandfathered under these three sections of the code
that have been around since 1913. Section 72E,
7702 and 101A. These sections of the code say money inside of an insurance
policy accumulate tax-free, you can take out money tax-free. And when you die, it
blossoms it increases in value and transfers income tax-free.
Nothing else does that. So, the reason why I like
an IUL over a Roth is because I get the 2
advantages of a Roth and four additional ones. What are they?
Well, I can structure my IUL to be able to put in huge amounts of
money --100 thousand, 300 thousand, a million. We have
clients doing this all the time. You can't put that much in a lump sum
into a Roth unless a one-time rollover. So, I can put in huge lump sums.
If i can put in a large sum and I put in only
10,00 and I could have put in 100,000, there's 90,000
of room that I never lose. In the second, third, fourth year, I can
make up for all the room that I had that i didn't use. You can't do that
with the Roth. Once a tax year has gone, you have forever lost the opportunity
to put in what you could have put in in that year. I love the flexibility.
But if i need to access money, in a Roth I have to wait five years or until I'm
59 ½. If i throw in 100,000 and I
need to access 70 or 80 thousand, 30 days later,
I can do that for any reason. I don't have to prove it in an
indexed universal life insurance contract. I don't have to ask permission.
It's my money. I can do it with an electronic fund
transfer phone call. You can't do that with a Roth.
But here's the key: I can use indexing. Indexing means that my money is
linked to an index or indices with the insurance company but my money is
safe in the insurance company. It's not invested out in the market.
But when I use indexing, then they take the interest
on my money. If I have a million in there and the interest is 5%, that's
50 grand, and I can opt anytime to say, "Take that
50,000 of interest and have it put into
options, so you'll have the wherewithal to pay me
whatever the S&P or the Dow Jones or the Russell 2000, these are called
indices, whatever they do. And so, they're big boys and girls. They buy
upside options. If I have 5% on a million
(50,000) that buys options and it goes up 10%, the
50,000 doubles to 100,000 for them.
It triples to 150,000. But see, if the market loses,
then I don't lose. My million is still sitting there because I
never told them to put one dime of my money actually
in the market. Only the interest on my money can buy upside options
so that if the options expire because the market crashed,
i don't lose my principle of a million. That's where I have averaged 11%
for the last 27 years. And the cost of insurance was only 1 of those
percentage points. So, I netted 10 percent net internal rate of return. So, I love
indexing. The last advantage with an IUL is that if I died tomorrow in an
accident, every million in my IUL policies
would blossom to about 2 ½ million and transfer
income tax free to my wife or to my children
or to any charity I wanted to leave it to. There's not a Roth around that will
do that. So, why would I ever own a Roth
when i can have the 2 benefits of a Roth. I can accumulate my money tax free,
and access my money tax free plus 4 additional benefits Roths will never
have. I can put in huge lump sums. I can make up for lost time. I can take
money out even 30 days later without a penalty.
I can link my returns to an index and I make money when the market goes up and
not lose when it goes down. And when I ultimately die, it blossoms. It
increases in value and transfers tax-free.
People say, "How much does that all cost?" Nothing.
Now, nothing's free. I'm not paying for it. It's being paid for
with the 1%. I'm earning 11 and netting 10.
That's all covered. It just comes along for the ride.
And so, that's why i say an IUL is by far the best option especially when
you look at it compared to a Roth. I would never own a Roth.
Why would i do that when I can have something far superior?
Now, I've sort of spit out a lot of information in a few minutes here.
If this has intrigued you and you want to learn more about how to do this,
you want to understand how to structure an IUL
properly and fund it correctly so that it becomes this
cash cow for you. So, I call it The Laser Fund, liquid asset safely earning returns.
How to diversify and create the foundation for a tax-free
retirement with these additional advantages that Roths don't have.
This is a 300-page book. My 11th one. It's flying off of the warehouse shelves.
It retails for 20 bucks. I want to gift one to you
absolutely free. So, to claim your free copy of this book that contains charts
graphs explanations, this side has 62 actual client stories
and examples of how the laser fund is used for
not just retirement, college funding, for your kids,
real estate management, emergency funds and so forth.
But you can go to laser, l-a-s-e-r. Laserfund.com and
you can claim your free copy. You simply pay $5.95 shipping and handling.
I'll send out the book to you. I'll pay for the book and you can begin to learn
if you want to listen and learn and watch and learn more.
There's additional resources at that website.