In this episode, we are teaching five critical steps to take before retiring.
My name's Doug Andrew I've been a financial strategist now for more than four and a half
decades helping people plan for a comfortable retirement and so years ago, I developed a five
and a half-hour course that people could come to and attend live. They would get a
40-page workbook called retire by design and we would take them through these five
steps in five and a half hours and so in this particular episode I'm going to cover
just glimpses of some of the key parts of step number two and then if this intrigues you.
You're going to see how you can learn more about this by getting a copy of my book entitlement
abolition or my financial book the laser fund and also the 40-page workbook called retire by design.
So, whether you like to read and learn watch and learn listen and learn you'll see all kinds of
opportunities as we proceed here. So, the first step I covered in a previous episode and make
sure you watch that one because it talks about looking at the big picture. In this particular step
we're going to talk about the proper strategic tax planning. So, as we proceed through here you
want to utilize strategic tax planning and I'm going to help you understand why it's critical to
go through a unique process of predictability. So, at the end of the first step, I was talking about
the true wealth transformation process and this is a process I developed years ago that will help
people and make a transformation in their life not just financially but in every dimension of
their life. All three dimensions the financial, the foundational, and the intellectual dimensions,
and so the first step of that process is what we call the enlightenment experience and this
is getting educated like you're getting educated right now. Then you can go through what is called
a true wealth discovery to find out where you're at and where you're wanting to go
and then you can see a strategic design of how to reposition maybe financial assets
to increase the liquidity safety and rate of return so you do not outlive your money
and you uh see a success formula that has a lot of flexibility. Then you go through a refinement
process. I have a beatitude blessed are the flexible for they shall not be bent out of shape,
and so you have to have flexibility and then you arrive at what is called a final action blueprint.
Then you go through and you implement the plan and then you have to meet at least once a year
to make sure you stay on track. Because if you take off to go around the planet and if you were
one degree off course. By the time you came around 26 000 miles you would be a 500 miles from your
intended destination if you didn't correct that one degree that you were off course. So this is why
it's important because life is full of surprises that you redirect or keep on course with all
of your goals not just the financial ones. So, this is called the accountability factor. Now you can
learn more about this if you engage in this five and a half-hour course called retire by design.
Now, I also mentioned at the end of step number one that a lot of times people are coming to learn
about how to optimize their financial assets and we go through four types of income and retirement
that most people draw from. Investment income, real estate income, guaranteed income, or tax-free income.
Now my favorite is the green one and so we explain and retire by design that this purple bucket
is where a lot of Americans I think are way too top-heavy into having money in yet to be taxed
IRAs & 401ks invested in the market. They have 80, 90, 100 of their money there. I would recommend
that no more than 30 percent of your money at retirement be from that bucket. Some people own
real estate and they're not happy. They don't want to be a landlord anymore. They don't want
to fix toilets, these evict tenants and take out the trash. But they're stuck because they've been doing
1031 exchanges. We free them from that trap and they're often shocked even after paying a capital
gain tax how they can have equal or greater income out of the green tax-free bucket. Some
people and they rely on social security or their school teacher pension or whatever, that's okay.
I would recommend that no more than 30% of your income come from the purple or the blue bucket
and anywhere from zero to eighty percent of your income come out of this orange bucket.
Where do I recommend that 40 to 60 of your income come from? At retirement the tax-free bucket.
So that 40 to 60 of your income doesn't even show up on your 1040 tax return. Now, the IRS knows
you're receiving it but it's tax-free and we've had many people do what I call strategic rollouts
to where we take them from 200,000 of taxable income down to 80,000 they still have 200 000
of cash flow every year. But 60 percent of it 120,000 is in the tax-free bucket.
The IRS knows they're receiving it but it's tax free. We have saved many people a half a million,
three-quarters of a million, 1.2 million for one couple on their IRAs and 401ks of unnecessary tax.
One couple in California we took them from the highest tax bracket to a zero percent tax bracket
in less than five years moving money out of the purple bucket down here to the green bucket.
You'll learn how in this course. So, throughout the retire by design workshop that I would implore
you to dive into deeper you're going to learn how to convert to tax-free strategies and the
book that I recommend is the laser fund and I'm going to gift you a copy of it as the end
of this episode if you'd like to read and learn. So basically, we're talking about so many people
follow the advice of traditional planners and they try to charge up a retirement battery so to speak
that hopefully won't go dead before you do. Well, there's three big things that short out
most people's retirement batteries taxes, inflation, and market volatility. We can make you immune from
those in step number three. But you've got to understand what you want is a very powerful
generator that generates income for as long as you live if you live to be 120 and it usually
generates anywhere from double to triple even quadruple what most people have their money in in
IRAs and 401ks. It generates money not only as long as you live but for your spouse your children and
grandchildren in what I call a family bank. You'll learn about that in the retire by design course.
When I ask people how many of you feel like future tax rates will be lower? I get nothing but crickets.
How many think they're going to be the same? Very few hands go up. When I ask how many of you think
taxes in the future will be higher? A sea of hands goes up and then I say, "So, why are you postponing tax?".
Why did you defer or procrastinate paying tax in these areas or 401ks to some future perceived
unknown advantage and people say, "Well, I was told I would likely be in a lower bracket", well I found
that most people who accumulate a respectable retirement nest egg are not in lower brackets.
The only people in lower brackets are those that didn't save very much. So, we need to now correct
the problem. This is why we look at multiple ways that the government uses to raise taxes. They raise
tax rates, tax thresholds, they eliminate deductions. The government giveth and the government taketh
away. The largest deductions we typically lose in retirement might be your mortgage interest
deduction. Your children and dependents move away if they move back you can't deduct them anymore.
You're not contributing money to IRAs or 401ks and if you're a business owner you don't have
those and so we're sort of going down the highway with one foot on the gas pedal and the other foot
on the brake pedal and we don't even know we're doing it. We're putting money in tax deferred
accounts and we're killing our tax deductions as we go by paying off the house and by later on
not contributing to those accounts. So the biggest dangers that cause people to outlive their money
are taxes. Inflation, which causes people to outlive their money because they have to double the amount
they withdraw in order to have the same standard of living about every seven to ten years. Market
volatility your money should not be in the market when you retire wall street was not built for that
and then expenses medical expenses, long-term care. These are the things that cause people to take
care of their health because people are living longer and they're running up health care costs.
We can solve or eliminate the danger of time. So, that's what step number two is all about.
The biggest dangers are taxes inflation and market volatility. My favorite vehicle which I call the
laser fund actually eliminates these dangers makes you immune from them. Because you can convert to
tax-free vehicles the laser fund is totally tax free. Inflation will help you instead of hinder you.
You link your returns to the things that inflate. I don't like inflation any more than anybody but it
doesn't hurt me. If inflation goes to 10 I earn 15. If it goes to 20 I earn 25. You link your returns
to the things that inflate and this is important for you to know now and then you want to make
yourself immune from market volatility. You want to be able to make money when the market goes up
and not lose when it goes down by using indexing. So, the three greatest strengths of my favorite
vehicle which I call a laser fund which is indexed universal life insurance contracts structured
to be maximum funded. It turns into a tax-free cash cow is liquidity safety and rate of return. Those
are the three key elements of a prudent investment. So folks, deferred taxes mean increase taxes. If you
were to reposition money and do it strategically you could accumulate your money totally tax-free
and the best way to do that in my opinion is a laser fund. So as you do that you'll learn about
four phases of retirement planning contribution accumulation distribution and transfer.
Most Americans are crawling around a racetrack so to speak on this million-dollar dash
and they put money in in taxed as earned investments it's the worst way to save and
the most common way people say banks credit unions regular mutual funds. If you put after-tax money
into an annuity you only get one green circle. You take after-tax money it's tax-deferred but when
you start taking out income it's now taxable lifo. You'll learn what that means. If you put money into
traditional IRAs or 401ks you only get a tax break on the seed money. Do you know a dollar doubling?
Every period for 20 periods will grow to a million dollars if it's tax-free. People say, "Well, I will if
it's tax-deferred", no, you got to go to the back end when you start to take out the money. When you
double that dollar and you pay tax every year as it doubles you pay taxes you go the way most
people say. In a 25% bracket, you'll only have 72,000. Do you know in a 33% bracket you'll only have
$27,000 2.7 percent of what you could have had. So, what's better? See, instead of these strategies what
I like to use is something that's going to be tax free on the back end during the harvest. This is
why I would rather pay tax on the seed money and enjoy the harvest without tax. This is not a Roth a
laser fund is way better than a Roth and you'll learn in retire by design why. So, most of these
traditional IRAs or 401ks give you a tax break on the front end but on the back end you pay tax.
I would rather take after-tax money and put it into an MFTA max funded tax advantage
section 101 an alternative, that's a laser fund. I can accumulate my money tax-free. I can access
my money tax-free and when I die it blossoms and transfers tax-free. This knocks the socks off of
an IRA 401k that only has two green circles. Now in retire by design, you'll also learn
how you can actually have four green circles by using tax planning. I don't have time to do that in
this episode I'm already over time. But folks learn how you can do what I call a strategic rollout
from this purple bucket maybe reposition some of your real estate but get money down here to the
green bucket by performing what I call a strategic rollout. Learn how by using the laser fund. So folks,
if this is intriguing you, I've just sort of hit the tip of the iceberg. I would implore you
to engage in a full five and a half hour retire by design online version. You can come to a live event
if there's one in your area or you can read my book the laser fund I'll show you how to
get a free copy of this. But subscribe to this channel it's free click the bell then you'll be
notified every time I post an in-depth answer to a financial question which I do almost on
a daily basis. Again, stay with me to the end and I want to gift you a copy of the book the laser
fund how to diversify and create the foundation for a tax-free retirement. So, in the second step
of these five critical steps one of the things we do with strategic planning is we often set up
what we call a strategic rollout. Let me give you a glimpse of that before I end this episode. I've
had people come to me and they accumulated two or three million dollars or more in tax-deferred
IRAs & 401ks and they thump themselves on the chest and say, "Look at what I've got", and I go, "Wow."
Yeah, it looks like you could pull out 160,000 a year out of these IRAs & 401ks and you have
40,000 coming from your school teacher pension or maybe social security whatever and they thump
themselves on the chest and say, "Yeah, we got 200, 000 of income", well you're going to need 400,000 in
seven to 10 years to buy the same gallons of gas and loaves of bread at 200,000 buys a day at the
current rate of inflation. But the biggest problem I see is that's all showing up on the front page
of your 1040 tax return. They go, "You mean there's another way?", yeah, that's in step number three. Be
sure and watch this episode next. What we did is we took a situation where people were paying
54,000 a year in tax the rest of their life. They only netted 146,000 out of the 200,000 to buy gas and
groceries. In five years doing a strategic rollout we removed 120 000 of their annual income off of
their 1040 tax return. The IRS knows they're still receiving it but they know it's tax-free. What does
that mean? They still have 200,000 of income but they only pay 21,600 in tax. They are netting
178,000 to buy gas and groceries. We save them 32,400 a year in tax times the number of years they
will likely live and we save the average couple 810,000 in unnecessary tax. We do this all the
time by performing step number two out of these five critical steps. If you would like a copy
of the laser fund you go to laserfund.com that's again laserfund.com
or click on the link below. You contribute a nominal amount towards the shipping and handling
and I'll fire out a copy for you. I'll pay for the book you just contribute towards the shipping
you can read and learn it's actually two books in one. This side is 200 pages with all the charts
and graphs and explanations. If you learn more by stories you flip it over you read the orange side.
This is a hundred pages 12 chapters with 62 actual client stories. If you want to use your whole brain
read both okay but this will empower you and I want you to claim your free copy. But by doing that
by going to laserfund.com not only will you get this book but you'll be in our database and be
notified you can attend a webinar and be qualified to get the five and a half hour online course
absolutely free. You don't want to miss out. So, here's to your brighter future.