- Do a strategic rollout from IRAs and 401ks
five years before retiring.
In this educational episode
I'm going to address how to convert to tax-free income
during your retirement.
Get ready, this could save you a quarter of a million,
a half a million, maybe even $1.2 million
of unnecessary tax, like we did for a husband and wife.
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So, I'm Doug Andrew, I've been a financial strategist
and a retirement planning specialist now
for north of 48 years.
And for that nearly five decades,
I've been very passionate
about helping people optimize their assets
and minimize taxes
and empower what I call their authentic wealth,
but helping people to make sure
they do not outlive their money.
As a financial strategist,
I've noticed that there are three big dangers
that cause most retirees to outlive their money.
Taxes, because they thought they
were gonna be in a lower tax bracket
when they retired, and most people are not,
if they're savers.
Number two, inflation, and inflation
erodes away the purchasing power
of the dollars they have saved,
so that retirees ofttimes will have to have
twice as much money every 5 to 10 years
in income to buy the same gallons of gas
and loaves of bread that they were buying,
you know, just 5, 10 years earlier at the current rates
of inflation, which are now 7%, 10% and even greater.
So taxes, inflation,
the third big danger is market volatility.
So what I have done for five decades
is help people make themselves immune
and their retirement funds immune
from those three dangers:
taxes, inflation and market volatility.
We do that by using one of my favorite
financial instruments,
which I call the Laser Fund.
A Laser Fund is simply a ax-funded,
Indexed Universal Life Insurance contract,
but it has to be structured correctly and funded properly
in order to perform the way
that I talk about on this channel,
to where if you earn 9%, you're netting 8%,
if you earn 11 you're netting 10,
if some years, you're on 25, you're netting 24,
over the life of the contract.
And very few advisors, unfortunately,
know how to structure them correctly to do that.
And so this is about you and your brighter future.
And when people would come to me
as a retirement planning specialist,
many times I would look at the value
in their IRAs in 401ks, and I would go,
"Oh my heavens, were you planning
your retirement or Uncle Sam's?"
Because they would have 80%, 90% or more
of their retirement nest egg invested where?
In yet-to-be-taxed IRAs and 401ks,
usually invested in the market, and I would go,
"What are you thinking?"
Okay?
Wall Street was not ever designed
or built to create income.
If you ever ask Wall Street,
when's the best time to sell my stocks,
or liquidate my Mutual Fund shares,
they will say, "Never!", okay?
That's why most broker dealers
forbid their advisors from showing retirees
a predictable income stream out of their Mutual Funds
or outta the stock market.
If they do illustrate anything
it's called the 4% Rule,
on every million bucks you've saved,
they only want you to pull out 40,000 a year,
because Dalbar, who studies investor behavior,
says the average retiree is only really earning
about 3.5% on their Mutual Fund portfolios.
That's pretty pathetic.
If you're pulling out 4%,
and you're only earning an average of 3.5%,
'cause people buy and sell at the wrong times,
you're slowly depleting your nest egg,
but not before your LE, your life expectancy.
And so this usually requires you rethink your thinking.
So people would come to my educational sessions
to prepare for a retirement
so that they would not outlive their money.
And I would teach them about these dangers
of taxes, inflation, and market volatility,
and how they needed to eliminate these dangers
which required that they reposition their assets.
So if the bulk of their money was in
yet-to-be-taxed IRAs and 401ks, invested in the market,
I had to get the money out of those IRAs of 401ks
and out of the market, so that they were immune
from the market volatility
and could create predictable cash flow
at more like 8% to 10% payouts,
on every $1,000,000, they could generate 80,000 a year,
maybe even 100,000 a year or more of income,
without depleting the $1,000,000 nest egg.
Whereas if they left it in IRAs of 401ks in the market,
they were told to only pull out 4% a year,
half that much, and it would slowly deplete their nest egg.
So it was a no-brainer,
but we had to perform what I call a strategic rollout.
Now this is where you're getting money
out of those IRAs of 401ks,
but you're not doing a rollover, see.
A rollover is like going from the frying pan
into the fire, so to speak.
That's where people have money in 401ks,
and at retirement they're rolling them over into IRAs.
If they don't need the money yet, I think they get duped
into continuing to defer, procrastinate, paying tax.
Until they're aged 72 and then they're forced
to pull out the required minimum distribution, RMD,
or else they're gonna be penalized 50% on top of the tax,
and the government wants that money
out and taxed before they die.
So that's called an RMD.
And many advisors say,
"Well, if you don't need the money,
just wait until you're 72 years old and then take out RMDs".
That's the worst advice.
In my opinion, for most retirees,
you're not saving tax, you are compounding it.
We developed software years ago that shows
the darkness of the night if you do that,
if you keep postponing and deferring until you're 72,
and then you take out RMDs
during the rest of your life and your spouse's lifetime,
and then whatever's left in there,
as it transfers down to your heirs,
they have to get it out and taxed within 10 years.
People are always flabbergasted,
shocked, with the amount of tax
they end up paying by stringing it out.
They're not saving tax, okay?
They're actually increasing it.
So then I show them a strategic rollout, not a rollover.
This is where we're getting money
out of those IRA of 401ks strategically,
usually over five years,
we're getting the taxes over and done with,
sooner than later, because most people believe
that taxes in the future will be higher, not lower,
not even the same.
So why do we wanna keep postponing paying taxes?
Some future perceived unknown advantage,
when we're convinced taxes are gonna be higher?
That doesn't make sense.
Now, some people think I'm talking about a Roth.
Now, a Roth IRA or 401k is a step in the right direction.
Only about 9% of Americans actually utilize Roths.
Still 91% of Americans are duped
into putting money into traditional IRAs of 401ks.
But see, they passed the Roth IRA,
and then later the 401k, initially in 1997
because the government was hard up for tax revenue.
And they said, "Hey, you know what?
A lot of Americans are getting smart
and they're realizing it's better to just get the taxes
over and done with sooner than later
and then turn on tax-free income down the road".
And so it triggered tax revenue for the government,
because people went,
"Oh yeah, I'm gonna convert my IRAs in 401ks to Roths",
and that generates tax revenue.
And so the government got a nice windfall,
but they did it for them, not so much for you.
It was a step in the right direction.
Now on this channel,
you may have heard me say
that I've never owned an IRA or 401k, I never will.
I've never owned a Roth IRA or 401k,
and I never will.
Why? Because my favorite vehicle,
Indexed Universal Life, structured correctly
and funded properly, which I deem a "Laser" Fund,
"Laser" is an acronym that stands for
"Liquid Assets Safely Earning Returns",
that knocks the socks off of Roths.
Roths only have two benefits.
You fund a Roth with after-tax dollars,
but your money accumulates tax-free
and you can access the money tax-free.
That's it.
Now IUL has had those two benefits
now for over 108 years in the Internal Revenue Code,
but you have four additional benefits
with a Laser Fund that you don't get with Roths, okay?
In a nutshell, there's no restrictions.
I can put in, you know, 50,000, 100,000, 300,000 a year,
you can't put that much into a Roth.
You don't have to put in 300,000,
you could put in 30,000 and you could make up
the other 270,000 anytime in the future.
You cannot do that if you don't use the room
in a given tax year with a Roth, it's over.
But I could put in 300,000
if I have a banner year as a business owner, let's say,
and if, a month later, I need to go access
200,000 or 250,000 of that,
I can do that out of a Laser Fund,
there's no penalties with the IRS.
I don't have to wait till I'm 59 and a half.
With a Roth, you have to wait five years
or till you're 59 and a half,
these are all the strings attached
But see, Roths don't use indexing.
Indexing allows me to participate
when the market goes up,
and then not lose when the market goes down.
I may not make much of anything
when the market crashes 20%, 305 or 40%, but I don't lose.
And I start making money again
the minute the market turns around,
instead of waiting three or four years
to make back what I lost,
like people had to do after the 2008 crash.
it took until 2012 just to make back what they lost, okay.
And so indexing is offered with the Laser Fund
which is not available with Roths.
The last benefit is, when I finally die,
anything left in my Laser Funds,
blossoms and transfers tax-free.
I'm just about 70 years old,
as of the recording of this episode,
and so if I died in an accident tomorrow,
every million that I would have in a portfolio
of Laser Funds would blossom to
about double that, 2 million,
and transfer totally income tax-free
to my spouse, my kids, a church, a charity, whoever I want.
There's not a Roth around that will do that.
Now people always say, well, "Hmm, how much does that cost?"
Well, nothing's free,
but it doesn't cost me anything.
It's being paid for,
it's coming along for the ride,
being paid for with a minuscule portion of money
that would otherwise go out the window in unnecessary tax,
if I followed the herd and put money into
traditional IRAs and 401ks.
So you convert to tax-free income
by doing a strategic rollout,
and so that normally takes five years.
We've had people who have rolled out
100,000 a year over five years, 500,000,
that 500,000 in their Laser Funds
has doubled every seven and a half years,
on an average return of 9.6%,
500,000 doubles to a million,
and then 2 million, and 4 million, and 8 million.
Yep, we actually have clients
that have 8 million bucks in their Laser Funds
generating 600,000 to 800,000
a year of tax-free income.
They went from the highest tax bracket
to a 0% tax bracket
in five years.
We do this all the time.
We have helped people save a quarter of a million,
I'm talking about school teachers,
three quarters of a million for a real estate landlord.
1.2 million for a husband and wife, both physicians.
We want to save you unnecessary tax.
So that's how you convert to tax-free income,
explore a strategic rollout, not a rollover,
talk to a specialist to help you understand how to do that.
Now, if you wanna learn more
this is why these books
are flying off of our warehouse shelves.
I teach Advanced Continuing Education
to CPAs and tax attorneys,
and when they learn this strategic rollout,
they're like, "Oh my heck, this is incredible!"
'cause they're guilty of telling people
to defer and defer, and take RMDs.
And then they realize that is not the best advice.
So this is a 300-page book,
it's called "The Laser Fund,
How to Diversify and Create
the Foundation for a Tax-free Retirement".
It retails for 20 bucks on Amazon,
I wanna gift you a copy of this, for free.
You simply go to www.laserfund.com., L-A-S-E-R fund.com,
click on the link below.
You contribute a nominal amount
towards the shipping and handling.
Come on, you gotta have some skin in the game!
I will cover the rest of that.
And I will pay for the book and fire up a hard copy to you,
300 pages, it's actually two books in one.
This side is about 200 pages,
14 chapters, with all the charts and graphs
and explanations.
If you learn more by stories
you flip it over and read this one.
This is about 100 pages,
12 chapters with 62 actual client stories,
and there's a chapter in there
that talks specifically about strategic rollouts.
And I think there's like five or six stories
in that chapter that helps you understand
how you could implement this strategy
for yourself, okay?
And so claim your free copy.
There's also options there
if you wanna listen and learn, watch and learn,
you can join us for educational online
virtual seminars and webinars.
And you can even speak
to an IUL specialist to see how these strategies
and a strategic rollout may benefit you.
And they can create a report to show you
an RMD analysis report of how much better off
you're gonna be and how much you will save in tax
over the long run by doing this strategy.
So this is about you, your brighter future
and not outliving your money during your Golden Years.
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