- What is the third leading danger
that causes most retirees to outlive their money?
In this episode, this is part three of a three-part episode,
I'm gonna reveal the third leading danger,
and they're in order for a reason,
that causes most retirees to outlive their money.
If you have not watched the first and second parts,
I would recommend you do so.
(upbeat music)
I'm Doug Andrew and I've been a financial strategist
and retirement planning specialist
now for nearly five decades.
And so I've been helping many, many people optimize assets,
minimize taxes, prepare for a comfortable retirement,
so they will not outlive their money.
The sad fact is, most Americans today
will outlive their money,
following traditional financial planning advice,
putting money into traditional IRAs and 401ks.
Even Roth IRAs and 401ks isn't going to do
as well as they could have if they would understand
and learn from these video episodes
that I'm recording right now.
And so I'm going to share with you in this episode,
the third leading danger, If you have not watched
the other two, I'd recommend you do that
and I'll sort of connect the dots at the end of this one.
But this danger is actually because of the other two.
Those precipitate this danger or it makes this danger happen
because of the two previous ones.
But it is very real and we're experiencing it right now
big time as of the recording of this episode.
So folks, danger number three, market volatility.
Now we've always had market volatility,
but it's going to get worse before it gets any better,
in my opinion.
So it will continue for several years
because of irresponsible government spending
and the printing of money.
All of these things that the government has been doing.
Again, if you're not aware, the IRS,
a couple of years ago, for example,
brought in about $4 trillion in revenue,
they refund about 800 billion,
and so they netted about 3.2 trillion, okay?
Now because of COVID-19, they spent twice that.
If you spent twice as much as you made,
how long could you do that?
Well, right after that, they decided,
hey, let's pass these spending bills
and call 'em stimulus, okay?
And so they, they passed bills
that added another 3 trillion of spending.
And then they tried and tried to to pass another
build back better and you know, it didn't cut it.
And they said, well, let's just change the name of it
to Inflation Reduction Act
and let's sort of hide with smoke and mirrors this.
And all of a sudden go, Oh yeah, let's vote for that.
And if you do the math, basically the government
with these programs and then student loan forgiveness
and what have you,
they're spending between three to four times
what they bring in in revenue.
Now, when they do that there's only two ways to try
to make ends meet.
And that's two print money which they've been doing
way faster, five times what they've ever done previously.
And if you print money to try to cover all of that spending,
that causes inflation.
And I can't believe some of these politicians are like,
Oh I don't know where there's inflation's coming from.
Yeah, just look at any country who tried to solve
their spending by printing money
that it didn't cause exorbitant inflation at the time
and it went to their demise.
That's where we are right now.
And then they continue to spend.
And so we have the spending, they raise taxes,
they print money, which causes inflation.
Those two then are domino effects over to
the market volatility because Wall Street is trying
to figure out, oh, what's going on?
Are they gonna do this? Are they gonna do that?
And that causes investors and so forth,
even institutional investors to get very concerned.
And this is why, you know
they wanna change the definition of what a recession is,
'cause it's not good, you know to have election years
if there's a recession going on.
So they wanna hide it in smoke and mirrors.
Well folks, here is something that a lot
of financial advisors don't even understand
and it just blows me away.
If you have a 25% loss, okay?
If you have a a million dollars
and it loses 25% down to 750,000, a lot of advisors say,
well the market dropped 25% and then it came back 25%
and they think you're back to break even.
I'm going, who taught you, no if a million goes down
to 750,000, that's a 25% loss.
A 25% loss has to be followed by a 33% gain
to get back your money.
See 33% of 750,000 is 250,000.
So if you have 750,000 after a 25% loss
that has to grow by 33% just to get back to break even.
Well that means that if you lose 33%, if a million went down
to 667,000, it's gonna have to grow by 50%.
It's gonna have to have a 50% increase
to come back to a million.
Many people in 2008 lost 50% and yeah, people say,
oh the market was back up 46% over this time period.
You should be back to break even.
No, if you lose 50%, if a million goes down to 500,000
that 500,000 has to have a hundred percent gain.
It has to double in order to make up for a 50% loss.
Okay? Now you may be aware,
Warren Buffet had two rules of investing.
Rule number one is don't lose money.
Rule number two was don't forget rule number one.
Well it's amazing how many financial advisors
don't know how to actually do that.
They think that's just cute.
Well here is the S&P 500 during the worst 12 year period
since the Great Depression.
It includes the great recession.
If investors had their money in tax deferred IRA or 401ks
in the market, okay and they had a million dollar nest egg
that they saw that million dollar nest egg
after the 9/11 terrorist attacks go down
from 2001 to 2003 down to 650,000, even 600,000.
It took four years to come back, okay?
Up here to a break even in 2007,
many retirees had to put off retirement seven years,
they felt like they had lost their future.
Then in 2008 what happened, as Warren Buffet put it
he said when the tide went out in 2008
it revealed who was swimming naked,
meaning who wasn't protected from that market volatility,
the mortgage meltdown, all of that.
People lost 30, 40, 50% for the second time in a decade
and it took four years until 2012 to finally
have $1,046,800 to show for their original million.
We call it the lost decade 'cause inflation,
they weren't ahead of the game.
Now during that 12 year period
just to give you a sneak preview, my favorite vehicle,
which I call The Laser Fund
and I'm gonna gift you this 300 page book
at the end of this episode, so stay with me.
The Laser Fund people who owned those had two
and a half to three times their money.
If they had a million here,
they had two and a half to 3 million here.
They did not lose during those downturns in the market.
'Cause I have the solution for market volatility.
You don't wanna have to worry about market volatility
when you're retired. Okay?
So this is what it looked like
and that is a pathetic one third of 1% compounded rate
of return during that great recession.
Well we are gonna continue to have those types
of recessions.
So by using indexing a strategy that is part
of The Laser Fund.
A laser fund is a properly structured, maximum funded
indexed universal life insurance contract.
But see it has to be structured correctly
and funded properly.
And so many of our clients, they ended up with 130% more
instead of 4% more.
Even if they only just, you know, like fell asleep
and woke up 12 years later like Rip Ben Winkle
and they had 130% growth on their money instead of 4%.
But the advisors that I point my students to,
they rebalance and so it was much greater than that.
If you started in 1975
which is the year after I began in 1974
with a half a million dollars in the market, in the S&P,
your money would've done really well in the nineties.
And then we look what happened in 2001 to 2003
and again in 2008.
But people go, well you know,
you have to just go through it,
the market is like a person with a yoyo, you know
and so you end up with 5.6 million
and that sounds pretty good.
Well for 35 years you had a lot of heartburn.
But I say well golly, you could have had 8 million
and no heartburn.
Because if you go through all of those gyrations
in the market to end up with 5.6 million
and most people they wait and the market goes down
and they sell low and then they wait, wait, wait
and they buy high.
So they're not averaging that average of about 9%.
DALBAR says the average person with money in the market
is only averaging three and a half percent.
That's unfortunate.
If you had a 5.6 million in a tax deferred IRA or 401k
'cause you started out with a half a million,
that's not all your money, you only have 3.8 million.
That's the first danger, taxes.
Wouldn't you rather have 8 million
and you never lose money when the market goes down,
during the down years, which usually 30% of the years
are down years, 70% are up years.
You make money during the 70% of up years,
you do not lose one dime.
You may not make anything of the down years
but you don't lose.
In that 2000 to 2010 period there were five down years.
Many of our clients they didn't make anything
but they didn't lose.
The other five years they made money
and they ended up doubling their money,
if that's all they did.
I'd rather have 8 million tax free.
So what a lot of people don't understand is
how to be able to participate when the market goes up
and not lose when the market goes down,
'cause your money is not invested at risk in the market.
It's safe in an insurance company
and it's earning a general account portfolio yield
of 4 or 5%.
But anytime you want you can relinquish that 4% interest
and allow the insurance company to fund an options budget
to buy upside options so that they can pay 8 and 12%,
even 25% up to maybe a cap, if the market goes up.
But if the market goes down, those options expire worthless.
But you still have your million, you only gave
up the interest on your million that year to go for it
if you felt bullish about America.
You need to watch other episodes on this channel
to understand what I just said.
But see what we do with the advisors I point my students to,
they might diversify 40% in a one year,
what is called a high cap,
40% in a two year, 20% in a five year.
Why? Because even though these are capped
and these are no cap, the average has been 11.3%
over any 20 year period for you know
ever since the Great Depression.
If you seize opportunities like when the market goes down
which happened in March of 2020
because of COVID 19 pandemic, when the market went down 30%
or as of the recording of this episode in 2022,
a few months ago the IUL professionals
that I point my students to said,
hey link in this downturn 50% to a two year,
50% to a five year.
Why? Because the average is 14% tax free.
So folks, this is an example of an actual statement
of an IUL insurance contract structured correctly
what we call a laser fund.
And they diversify in one single company,
one single product and they earned 14, 10, 15, 8, 13%.
Yep, this is the real deal.
Here's another one, 14, 16, 10, 15, 13.
We even have opportunities like March of 2020
when my sons who are IUL specialists told their clients,
hey, link to a one year point to point with no cap.
Now that's a strategy you can use.
And they were able to experience the upside of 66.33%
from March of 2020 to March of 2021.
If you choose that one, there's no cap
but they subtract five percentage points.
So 66.33 minus five percentage points
they netted only 61.33%, chucky darn.
This client was able to earn 18,000 on his account.
He had, well he had 18,000 and it earned 11,500
and it was worth 29,000.
We have another client who had 852,000 in March of 2020.
He didn't add a dime to this account.
One year later in his laser fund
he ended up with 1,387,000.
He made 535 grand tax free.
But if the next year the market would've dropped 40%
he would not have lost one dime of that half a million
that he made the year before
'cause every year those gains are locked in and it's reset.
Okay, so folks, if you wanna learn how to do this,
you will actually see how many many people
using a max funded tax advantage insurance contract,
structured correctly which would be deemed a laser fund,
even though you know they're projected usually
like 12 years ago at nine and a half percent.
And we have naysayers or so say, Oh, I had never seen one
of these ever perform as good as they were illustrated.
Look at this one, 12.88 average.
They had 110,000 in it, 12 years after they took it out.
When they started it,
it was projected they would have 63,000.
It was projected they would have 63
and they ended up with a lot more.
This is the real deal folks.
So many times I feel like as a financial strategist,
I've got all this ammunition here
to help you fight these battles of taxes inflation
of market volatility.
Sometimes people don't even understand how much
a trillion bucks is.
That's what $1 bill is lined up end to end from here
to the moon and back 200 times.
And the government is spending it like crazy.
Social security has been technically bankrupt since 2009
and they keep pushing it off and they keep raising taxes.
It's a broken system.
It's not gonna last another 30 years
without taxes going up dramatically
and this is what causes people to outlive their money.
So in 2009, the last time we had market volatility,
I wrote this ebook called,
"Create Your Own Economic Stimulus."
And I actually showed this sinking ship
and I labeled it the U.S.S Economy.
And this is what was going on
because congressional people were passing spending,
spending money rearranging deck chairs on a sinking titanic
thinking that things were gonna come back.
If your outgo exceeds your income,
your upkeep will become your downfall.
Personally and as a country.
And so if this economy, okay, if we go into a recession
anytime you go into a market downturn,
I want you to be able to float, stay afloat.
That's why this channel exists
with these 3 Dimensional Wealth Strategies,
so you can stay afloat.
So if you wanna learn more and why, you know
a 401K is not the cat's meow we thought it was.
You're not gonna be in a lower tax bracket.
Uncle Sam is gonna have to take a bigger
and bigger piece of the American tax payer's pie.
And these congressional legislators are actually
slowing down an economy that's trying to score
some touchdowns and they keep causing it to get tackled
and slow down and enter into recessions.
So the third of the three biggest dangers,
is market volatility.
And unfortunately it's gonna stay.
I want you to eliminate the downside risk
and still participate in upside potential
by using this strategy called indexing
and using locking in your gains and resetting.
How can you learn to do that?
Eliminate the dangerous taxes, inflation
and market volatility
by converting to tax free,
linking returns to the things that inflate
and using indexing.
So folks, the greatest strengths of The Laser Fund
and it's what we put on the front of the book,
are liquidity.
The ability to access your money when you need it.
Safety and earning predictable rates of return.
And I prefer tax free.
These are the four pillars on this book
and you can score any investment on a scale of 1 to 10.
The Laser Fund scores between 33 to 35 out of a possible 40.
Nothing else even comes close.
Most IRAs and 401ks only score 18 to 22 out of 40.
So if you wanna learn more about The Laser Fund
here's how you can claim your free copy.
Simply go to laserfund.com or click on the link below,
you contribute a nominal amount
towards the shipping and handling.
I'll cover the rest of that cost and I will pay for the book
and I'll fire out a hard copy to you.
300 pages, charts, graphs, explanations,
62 actual client stories over here on the right brain side,
this is actually two books in one. Okay?
And then when you're in there check out if you like
to listen and learn, watch and learn.
But also you can see how we teach educational webinars
that are free.
And you can even schedule an appointment
with an IUL specialist to see how these strategies
may apply in your particular set of circumstances.
But don't delay.
If you miss out on eliminating the dangers of taxes
and inflation of market volatility,
you will have an absolutely unacceptable regret
at the end of the day and you're gonna outlive your money.
I don't want you to do that.
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