Maximize return, minimize taxes. In this educational
episode, I'm going to address the question "How to invest
retirement money after retirement?" Oh! You mean
people have money to invest after they retire?
You wouldn't believe how many people do. But many times they are
told the wrong advice. Get ready, you're going to be blown away with what
i'm going to share with you.
I'm Doug Andrew. I'm here in my radio studio. I've been very
blessed for the last 12 years to have a weekly
radio show that i produce. And it's broadcast on many stations in America.
I tell my listening audience concepts and strategies
to help them gain insights into opportunities that maybe they didn't
know existed before on how to optimize their assets,
financial assets, minimize taxes and not outlive their
money in retirement. And I've spoken over 85,000 hours in my
life to audiences of anywhere from 50 in a
workshop to 20,000 people at conferences. And many
times, people will ask me the question, "How
do I invest or what should i invest my money in
after I'm retired?" I go, "Actually consider yourself very, very
blessed that you have money to do that. So, many Americans do not have
that type of an option. They can't even ask that question because they have a
dearth they're wondering how they're going to make it. They're going to have
to rely on social security charity welfare or their children for support."
So, if you are asking, "Golly, how do i invest
after retirement or my retirement money that i don't need to live on in
retirement? How do i invest that best?" Well it's not
leaving it in your tax deferred IRAs and 401Ks.
Did you hear that? That's the opposite advice
of what you probably have heard from maybe a CPA
or even a tax attorney or your financial advisor.
They tell you to do what? "Oh, if you don't need the money, leave it there.
Defer, defer until..." It used to be 70 ½
because at that age is when you used to have to start taking the money out
to avoid a 50% penalty on the money that you should have
withdrawn based upon the government's life expectancy formula. See,
the government has been using you as a partner to accumulate your money tax-
deferred but they want their share of that and
they control what percent of that they want by just
raising taxes. And so, many times people think, "Well, I'm
going to keep putting it off until age 72" is the new age.
And then you have to start taking it out based upon your L/E.
L/E is life expectancy. Let's say at age 72 your L/E
is 20 years. That means you'd have to pull out 120th
of your retirement nest egg in your tax deferred accounts
to avoid the 50% penalty. If you had a million bucks, that would be
50 grand. If you don't, the penalty is 25,000
on that 50,000 plus you still owe tax on the 50,000.
The government will grab 80 or 90 percent of it maybe
if you don't withdraw the money and get the taxes
paid. And so, people sometimes I think are duped into waiting and deferring
procrastinating until they're age 72. And then they're told to take RMDs,
required minimum distributions. Which is the worst
advice I have ever heard. Now, people say, "Well,
if that's the worst advice why do they tell you to do that all the time
on CNBC on their financial shows?" And I go, "Ask yourself who's funding
CNBC?" Tax revenuers. They don't want to kill a partnership
where the government continues to earn a third
or more of everything you will ever earn if you
leave the money there. Why would they kill that kind of a partnership?
So, they tell you to stretch it out and take out RMDs if you don't need the
money. The first advice i give to people is if
you don't need all of the money in your tax-deferred
iras or 401Ks, don't leave it there thinking you're saving
tax. You're actually stretching it out. And I show them through software that we
designed how much they will pay in tax
if they string it out and take RMDs the rest of their life,
their spouse's life and then through their children. Now, children have to pay
tax on it within 10 years. It used to be children could
keep it the rest of their lives. No, the government wants it out. Within 10 years
if the children inherit it now. They're flabbergasted with how much
tax it adds up to. And I go, "You know what? Let's get the taxes over and done with
sooner than later?" And they go, "Wow, but it's going to hurt a little bit." Oh,
maybe for 5 years. But I've helped many couples pay
only 60,000 in tax instead of putting it off
and paying 250,000 by stringing it out. One couple they
were going to pay a 750,000 an unnecessary tax. We saved them
all of that 750,000. There was another couple
a husband and wife, both physicians. They had over 5
million dollars in yet-to-be-taxed IRAs and 401Ks.
They didn't need the money. And so, they came in with a similar question.
"Doug, we don't need the money. The 5 million out of these IRAs are 401Ks." But
they were approaching the age of 70 ½ at the time.
And they knew they were going to incur a 50% penalty.
So, they were going to take out RMDs. That's what their tax advisor said.
When I did the analysis for them, they were shocked how much they would pay in
tax if they followed that advice. Because most CPAs are only
looking at the tax you save in a single year
not all the years added up together. And this has happened so many times when i
tell people, "You know what? Bite the bullet.
Pay tax for 5 years. It's going to hurt a little bit.
Would you rather pay this much in tax and then have it be tax-free
forever after?" "Well, yeah. But it's going to hurt." I'm going, "You're going to be way
better off pay the tax." And I feel like Sam-I-Am
in Green Eggs And Ham if you've ever read that book
by Dr Seuss. I would say, "You will like this. You will see."
No, no. I don't want those green eggs and ham, I don't want to pay the tax.
And then after 5 years, they go, "Oh, thank you.
Thank you, Sam-I-Am. I like these green eggs and ham."
Yeah, they like the benefits and they ended up with
double or triple the net spendable income by getting the money out
as painful as it was. This couple, the 2 physicians,
I couldn't save them the 2.6 million of tax
on that 5 million. But i saved them 1.2 million.
You know what they did with 1.2 million of otherwise payable tax?
They put that into what I call a family bank. I talk about what a family bank is
in other episodes. But in a nutshell, that 1.2 million
is now there for their children and their grandchildren and
great-grandchildren to provide college education,
humanitarian, military, religious missions, all kinds of
humanitarian projects for their family. Family retreats with a
purpose for generations. If it went down the
drain in unnecessary tax which is what their CPA
said they should do. And frankly, when I asked the CPA, if they could save
and redirect 1.2 million of otherwise payable tax,
"Why wouldn't they do that?" The CPA said, "They can afford to pay 2.6 million
in tax." I'm going, "Why don't we ask them?" We ask them and they go,
"Well, no. Not if we can redirect 1.2 million to this."
See, they wanted to have choice and control
on 1.2 million of unnecessary tax because they were convinced they could
manage it far better for their family, for their values than just to go along
with where the government puts our tax dollars. Does that make sense? It
wasn't a tax loophole. They were actually becoming financially
independent and empowering their children grandchildren and
great-grandchildren to not have to rely on government or
welfare or anything else because they took ownership.
That's one of the reasons why where I told them to put the money is totally
tax-free. It's been a sacred cow in the internal
revenue code for a century. So, let me explain a little
bit deeper about how powerful this is. So, this is what I call a strategic
rollout. So, when people have money, be it in real estate
and they don't want to be a landlord anymore. Maybe we sell their properties,
you bite the bullet you pay the capital gain tax and you
reposition the net into a portfolio of maximum-funded, tax-advantaged indexed
universal life insurance contracts, where I've earned an average of 11.17%
for the last 25 years. And I've netted
after all costs over 10%. 10.07 to be exact.
That means every million bucks generates 100,000 a year of tax-free
income. That knocks the socks off of money in most
people's IRAs and 401Ks. It actually outperforms most people's
real estate properties. If they want to keep the real estate,
sometimes I say, "We'll, do a 1031 exchange to a better performing property where
you can quadruple your rental income." Sometimes
people are only getting an effective yield of 2% annual rate of return.
And I increase it to 8 or 10 percent. Whatever
we do, we optimize those assets so that in retirement,
we are doing far better. And we're minimizing the tax. We're converting to
tax-free. And so, in a strategic rollout out of
IRAs or 401Ks, this is not a rollover. This is rolling
the money out getting the taxes over and done with
sooner than later in today's lower brackets. Rather than thinking tomorrow's
tax rates are going to be lower. No. Reposition the after-tax money
into something that's going to be tax-free from now on. And at the end of
the day when they finally do pass away, it doubles, triples oft times
and transfers income tax-free. There's only
one vehicle in the internal revenue code that does
that. It's not a Roth. Roths don't blossom in value when you
die. It's a maximum funded tax advantaged insurance contract. And i
prefer indexed universal life. I'm here in my studio and I often talk
about my various books that I've written here.
My most recent bestseller is called the Laser Fund because i call it The Laser
Fund, liquid asset safely earning returns
spells the acronym laser. And so, wherever you reposition serious
cash that you don't want to jeopardize,
you want it to pass the liquidity test, safety test and the rate of return test
and tax-free accumulation is icing on the cake.
If you'd like a free copy, you don't need to pay $20.
That's the retail cost on Amazon. I will gift one of these to you absolutely
free. You go to laserfund.com
L-A-S-E-R, fund, ".com". You pay 5.95 shipping and handling. I'll pay for the book
and I'll fire one out to you free. You'll have options there to get the audio
version and also additional video education if you would like. But I
want to empower you so that you understand how to invest
properly especially during retirement to optimize those
assets, not outlive your money increase your net
spendable income. And leave behind this instead of leave
behind this at the end of the day to set up your own family bank.
You'll learn what a family bank is in this book.
book