Hi again. In this episode, we are going to talk about - how to not run out of money
especially in retirement because you're going to learn about the 3 biggest
dangers that cause people to out live their money. And if this is the concern
that you have, you're not alone and I feel for you. And this is why after
helping many of my own clients for more than 35 years, since 2005, I've been a
consumer advocate getting on radio on TV and speaking to audiences. I let all my
professional licenses automatically expire the last business day of 2005 to
help people like you in language that I couldn't use if I had a license or I
would be out of compliance. I am a totally compliant with what you need to
know but folks, this is about you. This isn't about me or my profession because
empowerment is the key and that's why I love to educationally empower people to
take ownership of their own brighter future.
So I'm Doug Andrew and I have helped people optimize their financial assets,
minimize unnecessary tax and empower their true wealth for 4 and a half
decades. Folks, it's not just about the money and if you watch a lot of my
episodes, there are many things that constitute true or authentic wealth that
has nothing to do with money. But when I help people optimize their financial
assets, I don't want them worrying about their money during their golden years. To
be able to predictably make themselves immune from 3 big dangers that I'm
going to point out here. But the metaphor I like to use is the difference between
a battery and a generator. See, I've noticed that most financial advisers and
I've trained over 3,000 of the nation's. Top CPAs and tax attorneys, they
seem to want to charge up a retirement battery that hopefully won't go dead
before you do. Well folks and there are 3 dangers that cause this battery to
short out before people pass away. I love to empower people like you with a
generator that will generate income predictably into perpetuity and also to
those you leave behind. For generations, that's why it's called a generator. And
so if you would like to generate wealth into perpetuity and be immune to the
things that short out most people's retirement batteries, stay with me here
because I'm going to show you the dangers and I'm going to share with you also the
opportunities that you need to seize in order to eliminate those dangers like
we've done for thousands of people just like you. So, I love to use acronyms. In
fact, my favorite vehicle is called the laser fund. Laser is an acronym that
stands for L-iquid, A-ssets, S-afely, E-arning, R-eturns. Well, I have an acronym the
spells T-I-M-E. And so, I think the biggest dangers that he wrote away people's
purchasing power in retirement and what they can live on, are taxes, inflation
market volatility and I also put down economic
uncertainty and it spells the acronym - T-I-M-E and time can really hurt us
when we do not take proactive measures to eliminate those dangers. So let's go
through them one by one. This is the biggest danger, rising taxes because most
people will agree with me because of irresponsible government spending and
the printing of money that we're going to have taxes continue to go up. And this
usually takes 25%, 33% as much as 40% of a retirees cash flow or net spendable
income. Let's say you have a million dollar nest egg.
If you were fortunate to be earning 10%, now most people they only pull out 4%.
That's the 4% rule in the financial services industry. Well, that means you
only pull out 40,000 out of a million dollar nest egg? You do that out of an
IRA or 401k and you pay 25% in tax. The 40,000 is really only netting you 30,000.
And then usually most money managers charge 1% management fees. What's 1% of a
million? 10,000. Wait a minute, you're pulling out 40,000, 10,000 goes out in
tax, another 10,000 goes out in fees. You're netting 2% - 20,000. What I do for
my clients and this can be done for you. I like to earn 8, 9 or 10%. I pull out
80,000 and it's tax-free. How much more is 80,000 than 20,000? It's 4 times.
It's 400% more income. Now folks, if this sounds too good to be
true, it is true. Sometimes the people say, "Oh, that sounds too good to be true
so I'm just going to ignore it." Hey what? a lot of things in my life sounded too
good to be true and they actually ended up being true. This works and we've done
it for thousands of people. But you want to convert your retirement income into
something that's going to be tax-free not just tax deferred. That erodes away
at least 25 to 30 percent of a person's income and many people like in
California, 40%. They pull out a 100,000 and they pay 40,000 in tax long
in net 60. Frankly, most people are not earning enough to be able to pull out
that much money. The second danger is inflation. Now, when
the government spends money and they print money to cover that, that causes
inflation. When has the printing of money to cover a federal deficit in any
country in the world, in the history of the world ever turned out good? You show
me one time. It never turns out good. And that's what's been happening in this
country. So when you have inflation, it erodes away the purchasing power. Now the
way to calculate inflation with the rule of 72 which I explained it in another
episode. Let's say inflation is 5%, you divide 5% inflation into the number 72
and that will tell you the cost of living will double about every 15 years.
Well, inflation, true inflation is probably more like 7 to 10 %.
Certain goods and services go down but you take medical costs and health care
costs it goes through the roof. Education, private education, it's unbelievable. And
so if you in 7 years or 10 years, I want to buy the same gallons of gas and
loaves of bread that you bought seven or 10 years earlier and you were getting
by on 50,000, you're going to now have to withdraw a 100,000 in
order to buy the same gallons of gas, haircuts loaves of bread, that 50,000
thousand bought earlier. And so the cost of living will double every 7,10 years.
That means the purchasing power of your dollar is cut in half. Do you want to cut
your lifestyle every 7 to 10 years and a half?
Most people don't. This is easier to solve than most people think as I'm
going to show you. But that is the second biggest danger. The third is market
uncertainty because we have our money out there in the market and we don't
know, people try to time and we have the volatility and we put our money in the
market that's the worst place to have your money when you retire. Because I've
seen people in 2008 that lost 40% for the second time in the decade from 2000
to 2010. The first time it happened was 2001 to 2003 after the 9/11 terrorist
attacks. People felt like they lost their future. They had to put off retirement
seven years just to get back to break even.
They finally in 2007 thought, "Okay, I'm back to break even." After 7 years and
in one single year, 2008, they lost 40% again. It took until
2012 just to get back what they lost. Do you know people following the
strategies I teach in my various books? They tripled their money in that 12 year
period. The million was worth 3 million, whereas most Americans their million was
just barely back to break-even because I eliminated this danger of market
uncertainty. I'm going to share with you the 3 strategies or opportunities
that you want to seize to eliminate those dangers. Make yourself immune
because we do this for all kinds of people no matter how much money they
have in this country and they are very grateful. They don't have to worry about
these dangers of taxes inflation and market volatility during their golden
years. So, how do we eliminate those 3 dangers? How can you make yourself immune
from them? Let's take taxes. It's easier than you
think. The way to make yourself immune from taxes going up to 40%, 50%, 60%, it
doesn't matter. What the government comes up with to tax us, I'm immune from that
because I reposition my money into tax-free vehicles. My favorite one is the
laser fund. I have about 60% of my retirement resources in the laser fund.
If I could I put a 100% of it but you can't. But when you have a
financial instrument that allows you to earn average rates of return of 7
8,9,10%, some years you'll make far more than that. Other years, you
may not make much of anything but you don't lose and we teach this in our
various episodes. But if you could average 8 or 9 or 10%
and its tax free it doesn't matter what tax rates go to. You're
immune from taxes eroding away your purchasing power.
Does that makes sense? Let's take the second one, inflation. Now, I don't like inflation
any more than you do. But inflation doesn't hurt me. It actually helps me
because what I love to set up is what I call a private retirement plan and this
is not an IRA or 401k. It is what I call a laser fund and I don't have all those
strings attached. I can fund it with a 100 or 200 or 300,000.
You can't do that in a Roth or a traditional IRA 401k. But see I linked
my returns I'm earning to the things that inflate. Now, I say that and some
financial advisers you get this glazed look on their eye like, "Whoa! How do you
do that?" Because their broker dealers don't teach them that because they make
their money by turning people's money in the market and that's subject to market
volatility which is the third danger. Let's say inflation goes to 10. I don't
worry because I've always earned about 5 and 1/2% or greater than
the inflation rate at any time. When inflation is 10, I earn 15. When inflation
is 15, I earn 20. If inflation were to go to 25, I earn 30 or more. Because I linked my returns
to the things that inflate. The things that are going up in value is what I am
linked to. Now, when I say link, my money is not actually invested in the market.
My returns that are paid to me by the financial institution tax-free, are
linked to if the market goes up, I benefit. But if the market crashes, I
don't lose because my money is not in the market, It's linked to the market. And
so, by having a private retirement plan, it solves the third danger because I'm
immune for market volatility. When the market goes up, I win. But when the market
loses, I don't lose because my money is safe in the insurance institution
earning 4 or 5% rate of return. But when the market goes up, they
have to pay me whatever I linked it to. The S&P 500, the Dow Jones, the Russell
2000 without my money being in those because the Dow Jones the SP 500 is
simply a measuring tape. I'm linked in it, that is what they must pay me. And
if you're going, "How do they do that?" They do it because they are very savvy but I
do not risk my money in the market. You'll learn if you study some of the
stories in my books like the Laser Fund, you're going to see in 2008 many of our
clients were cheering. Everybody else is panicking. Our clients were going, "Go, go!"
Because they're not losing. In the first 90 days of 2009, many of our clients who
used our strategies, they locked in gains of 16% tax-free, after not losing a dime.
Everybody else in America had to wait about 4 years until 2012
to make back the 40% that they lost in 2008. Don't do that.
So, the essence of this is to eliminate the dangers of taxes, inflation and
market volatility by seasoning the opportunity to transfer your serious
cash to tax-free vehicles. Link your returns to the things that inflate so
inflation doesn't hurt or hinder you and it helps you and 3, make yourself immune
from market volatility. You don't lose when the market goes down. You only make
money when it goes up but when it goes down, you may not make much that year but
you won't lose. And as Will Rogers once said, people get more concerned about the
return of their money when things are bad, instead of the return on their money.
If this is resonating with you, arousing your curiosity, I would recommend you
watch this episode to answer the question - is money in a traditional IRA
or 401k or a Roth? The best way to save, absolutely not.
I think the laser fund, eliminating those dangers and creating a generator instead
of a battery, that's going to short out with taxes, inflation and market volatility.
You don't need to do that. Watch this episode and then take advantage of
getting a free copy of my book, the laser fund if you want to dive deeper.