Select the zero tax bracket option on your retirement plan. In this episode,
I'm going to address the question "What is the best way to save for a comfortable retirement?"
It's not what you think. And at the end of this episode, I'm going to show you how you can get my
latest best-selling book, it's over 300 pages of information and 62 actual client stories that will
show you the best way to save for a comfortable retirement and not outlive your money.
So, I have a little ditty. It goes "Good, better, best. Never let it rest. Never let it rest until
good gets better and better gets best." I used to say that IRAs and 401(k)s were a good way to go. I
don't agree now. I think they're a poor way to go and you'll see why. It's a far cry from the best
way. Roth IRAs and 401(k)s are a better way to go. But I've never owned an IRA and 401(k), never
will. I've never owned a Roth IRA, 401(k), never will because I like to just go straight to the
best. So, let me explain what I'm talking about by talking about the 4 phases of retirement planning.
My name is Doug Andrew, I've been a financial strategist, retirement planning specialist
for 4 and a half decades. I've been honored to author 11 books that have all been bestsellers.
And I'm going to show you how you can learn more and empower yourself to not outlive your money,
have a comfortable retirement, and actually get by with a smaller nest egg and have the same income
that people take out of IRAs or 401(k)s in the normal financial services industry standard out
there. Or if you have the same amount as your friend or neighbor, I'll show you how to have
twice as much income out of your nest egg than they probably will get out of their nest egg.
So, what are the 4 phases of retirement planning. The first phase is what we call the contribution
phase. This is where you're contributing money to accounts saving for the future. That phase
overlaps the accumulation phase where hopefully you're earning interest, dividends, what have
you. You're making money and the next phase is a distribution phase. Maybe people call it the
withdrawal phase. But I found that many people go into withdrawal when they hit that phase because
they realize they're going to outlive their money. So, the distribution phase is when you
take out income. The last phase, some people don't think about it. It's the transfer phase.
It is where whatever you have in a nest egg that you had when you passed away because you wanted to
have something there to sustain you as long as you lived. People usually leave behind something that
would have sustained them had they lived longer. When you transfer that money to your spouse, your
kids, or whoever; people sometimes get shocked with what is being taxed at that phase. So,
we have the contribution, accumulation, distribution, and transfer phase. Now,
there's basically 5 different savings alternatives when we talk about being taxed in the four phases.
So, the first one is the worst way to save but the most common way Americans save. This is in taxed
as earned accounts where you put money in a bank a credit union, a mutual fund. And every year, they
give you your interest statement and you put it on your tax return and you pay taxes as you go. Let
me tell you how bad it is. If you had a dollar and you doubled a dollar every period for 20 periods
what would it be worth? A dollar goes to 2, 4, 8, 16, 32, 64 in 20 periods it's worth $1,048,000,
if it's tax-free. If it's taxed as earned, a dollar doubles to 2 dollars and you get taxed
at 25%, you only have a buck 75. A buck 75 doubles to 350, you pay tax on that.
Do you know how much you'll have instead of a million? $72,000. 7.2% of what you could have had.
In a 33% tax bracket which many Americans are in, many Californians are higher, you'd only
have 27,000 instead of a million. That's how most Americans save. Some people take after-tax
dollars and put it into a deferred annuity. If we were running a million-dollar dash around a track
and the goal is to have a million bucks net that is ours to buy gas and groceries, prescriptions,
and golf green fees the first method tax discern would be like crawling around the racetrack. You'd
only be 2.7% of the way around the track when with my favorite vehicle which I call the Laser Fund,
you'd be crossing the finish line with a million dollars, tax-free. If you take after-tax money and
you put it into a deferred annuity, that's like walking around the track. So, let's go to IRAs of
401(k)s. Here you're running around the track with the wind at the back at the beginning of the race
because you get to use pre-tax dollars. You get to tax-deduct it. But then when you're coming around
in retirement, the back 9 of an 18-hole golf game of life, let's say, retirement; now you pay tax.
And so, you got the wind against you. And you got inflation and people outlive their money because
of taxes, inflation, and market volatility. And so, that's jogging with the wind at the back at
the beginning. But it is really hard at the end, retirement. Now, Roths, you are running around
the track, you're jogging and you have the wind at the back at the end of the race. You pay tax
on the on the front end, your contributions. But on the back end, now you have money tax-free.
That's the wind of the back during retirement. And I can prove to you mathematically that if you
believe like most Americans do, the taxes will eventually be higher. Then, I can prove to you
a Roth will generate or provide probably 30 to 50 percent more in net spendable income than the same
amount of money in a traditional IRA, 401(k). If taxes go up, okay? Now, I don't own a Roth. I own
a Laser Fund because a Laser Fund allows me to be able to put in after-tax money. Actually, I'm a
financial strategist so in all my books. I show people how to get the deduction indirectly. So,
I can use 100% tax-free contributions if I want. But the most important phases are the accumulation
and distribution phases. I can accumulate my money tax-free, I can take it out tax-free. People say,
"Well, sounds like a Roth." Well, no. Roths do only that. Mine, when I ultimately die blossoms
doubles or triples and transfers tax-free. If I died tomorrow, every million would blossom
to about two and a half million in my Laser Funds. And it doesn't cost me anything. It's not free but
I'm not paying for it. It's being paid for with a miniscule portion of money that would otherwise
go out the window in unnecessary income tax. But I can use indexing. I can earn rates of return
averaging 6 to 10 percent. Most Roth and IRAs and 401(k)s in the market only average 3.49%.
I'm earning twice as much but it's tax-free. So, this is what is called the 4-percent rule
in the financial services industry. The 4-percent rule in the financial services industry means
this: Because most Americans have their money in yet-to-be-taxed IRAs and 401(k)s when they retire.
And that's usually invested in the market. Wall Street was never built to sell. If you ask
stockbrokers, wall street "When is the best time to sell my stocks?" What's the answer?
Never. It was designed to maybe accumulate money. But never create predictable income because
there's too much market volatility. And that's what happened in 2001 to 2003 after the terrorist
attacks. That's what happened in 2008 during the mortgage meltdown. People lost 40 percent
in the value of IRAs or 401(k)s. It took 4 years to make back what they lost. They had to put off
retirement 7 years. You need predictable income. So, I've helped many, many people get their money
strategically out of IRAs of 401(k)s at least 5 years before they retire and convert it into
something that's going to be tax-free and not subject to market volatility. Get it out of the
market. But because most people have money in the market, DalBar who studies investor behavior says,
"If they left their money there alone, they would probably average around 9.6%, maybe 9.4." If they
earn 9, a million dollars ought to generate 90 grand a year without depleting principle but
you have to pay tax on 90,000 in a 33% bracket, you're only netting 60,000. Most people are not
earning 9 because they're buying and selling at the wrong times. The market starts to go south
and when it gets down about 20 or 30 percent, people go, "Enough already!" And they sell low.
And then they wait, wait, wait, wait until the market is up here and then they buy again high.
So, the actual average rate of return for retirees on their money in the market is 3.49%. That's why
the financial services industry says, "We don't want to be sued for you outliving your money."
You can only take out 4% a year. It will slowly deplete your nest egg because you're only earning
3 and a half but not before you're L/E. L/E is life expectancy. If you take out more than 4%,
you have to sign a waiver that you will not sue them, ahold harmless. So, do the math. You have
a million-dollar nest egg, you pull out 40 grand a year, pretty pathetic. You have to pay tax,
even 25% tax. That's 10,000 of the 40. You're only netting 30. Most asset managers charge
you 1% on the million, that's another 10 grand. You pull out 40, you subtract taxes and fees,
you're netting 20, 2%. My Laser Fund, a million, I can pull out 60,000 tax-free, it will never
deplete based upon actual history in the worst of times. How much better is 60 than
40 or even a net of 20. Because my 60 is tax-free. But I've actually been able to withdraw 80 to 100
thousand a year tax-free. What would you rather have? 40,000 and then have to pay tax on it,
would you rather have 80,000 totally tax-free. I think I know the answer. If this intrigues you,
let me show you how you can study and read about this and empower yourself to do something better
than an IRA or 401(k) and actually be in a zero tax bracket. We've helped many, many people who
were in the highest tax bracket and in 5 years, they now are in a zero percent tax bracket. The
IRS knows they're getting 500,000 a year but they know it's not taxable. It's a sacred cow. This is
not a loophole in the internal revenue code. So, don't miss out. Let me show you how you can learn.
So, as I mentioned, I love to educate people. And my most recent best-selling book here is
called The Laser Fund. It's a 300-page book, about 200 pages is all kinds of charts and
graphs and explanations of how this works. How to diversify and create the foundation
for a tax-free retirement. If you learn better by stories, you flip it over and you read this one.
And if you want to use your whole brain, you can read both books. Okay? But I want to gift this to
you absolutely free. If you go to laserfund.com, LASERfund.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.
There's also options there to listen and learn, watch and learn with all kinds of education
because I believe in empowering you to take ownership for your brighter future.