An extra million dollars in 10 years. In this educational episode, I'm going to
address the question "How to invest for retirement at age 60?" Is it too late?
Nope. But you have to do some very specific dynamic things so that you
won't outlive your money when you're starting that late.
Hi, i'm Doug Andrew. And I've been a financial strategist, retirement planning
specialist for north of 46 years. And so, I've taught over 85,000 hours in front
of audiences of at least 50 people up to 20,000 in the ballroom of a hotel or at
a convention. And many times when I am teaching concepts about asset
optimization, tax minimization and getting ready to retire and not outlive
your money, people will ask, "Golly, well how can I invest for retirement if
I'm already age 60? I'm on the verge of retiring and maybe
5 years or 10 years. Isn't it too late?
I go, "No, no, no, no". This is what you need to do now that you've been around the block so
to speak. Because frankly, this is where I spent most of my career and helping
people that were already 55, 65, 75 even 80 years old optimize their assets. Do
better than what they had done. And they had been around the block. And I like
those people because they actually are usually humble. They admit that they
made some mistakes. And if I have younger people, they have less money. When the
first straw and the windstorm comes, they they go, "I don't want to sell my jet skis.
I don't want to sell my boat. No, I don't want to sacrifice that kind of stuff." And
so, it took them sometimes 20 or 30 years to realize, "You have to be pretty serious
and disciplined." So, I spent most of my time if I were a physician (let's say)
curing the dis-ease, see when you're not at ease, physically, okay? At a cellular
level, when we're not at ease is called disease. Dis-ease. Well, many people that
came to my educational events we're trying to make up for mistakes they had
made or lost time preparing for retirement. So, I had to cure them not
being at ease financially. I had to cure that dis-
ease. And so, when they would say, "Golly, is it too late for me? I'm already age 60." Nope.
But if I ask them, "When do you want to retire?" And they go, "Oh, I think I have the
health that I want to work at least 10 more years." Okay. I know if I have 10
years. And I look at their situation. It's not like they're they're broke. There are
a few that somehow lost it all in a bankruptcy or whatever. But most people
had some assets. But I showed them how they could have an extra million in 10
short years or less. And that that extra million could generate
100,000 a year of tax-free income into perpetuity whereas a million in a
traditional IRA or 401K invested in the market unfortunately only generates
about 40,000 a year of income and it's not tax-free. Net
after-tax, they're lucky to net about 26,000 thousand out of the 40,000
because they had to pay tax other 13,000 between federal and
state income tax. And so, I did this a lot. Now, here's what I would do to help them
understand this. In fact, my third book Last Chance
Millionaire actually has 4 examples in it of couples who started at age 55,
age 60, even age 65. And in 10 short years, I showed them how to have an extra
million-dollar. So, you can read that in the book. But let me give you the
highlights of what I taught people in that book and what I also taught to many
of them that came to my educational live events. So, let me tell you a story of one
couple that had a home that they had raised their 6 children in and they
had bought that home for I think a quarter of a million dollars when they
first purchased it. And now, it was worth about a million bucks. And so, I go, "Well,
there's one asset that you're underutilizing. Do you want to stay in
that 6,500 square foot home the rest of your life
where you go honey, honey, honey. And it echoes because it's such a big house." Now,
if they want that for some reason or this
where the kids and grandkids come, great. I understand that because I still am in
my home where we raised our 6 children. But many times, they say, "You know what? We
want to downsize." I said, "Okay, if you did that, you could sell this home for a
million dollars. What are you gong to do with that?" We'll take half a million and
buy a retirement home down in southern Utah for the wintertime. And in the
summertime, we like to live in northern Utah because we like the temperatures there
better. And so, we were going to pay cash for a retirement home a half a million in
each place. I go, "Let me show you a different way. If I were you, I'm going to
not pay cash. You can pay 20% down payment. So, you use 200,000 of that
million and you keep the other 800,000 and you keep it out of the property. And
you mortgage those 2." What!? We didn't work our whole life to have a mortgage.
I'm going, "No, this is how money works. When you put money in a bank, you're
lending your money to a bank. Why are they borrowing your money? Because
they're going to earn more than they pay you to borrow your money. If you were to
finance those two retirement homes, 400,000, 80% loan to value and you
finance that at 4.5% interest, it's tax-deductible." Because
it's a primary and a secondary residence. Okay? You have to make sure the tax laws
at the time allow you to deduct that. But if you borrow it 4.5%
and if it's deductible, it doesn't cost you 4.5, it cost you 3. And I show them
that the 800,000 that goes over into a max-funded indexed universal life
insurance contract historically has earned 8% in the worst of times. But in
the average last 25 years or so, it's been 11% netting 10% by using
indexing and rebalancing. And I teach this in my various books. And so, you earn
10. Well, how much more is 10 then 3 that the net cost on the mortgage? Or
even if the only earned 8, how much better is 8 than 3? Or if you earned 9
and that your costs were 3, how much more
is 9 than 3? That's 300% more. You're making 90,000 every... Well, the
very first year. And you only paid 30,000. You're your own banker, so to
speak. They go, "Whoa!" So, let's just compound this over here for a few years
and it gets better and better. And in about 10 years, they would see the money
inside the insurance contract, the 800,000 that was going to be
lazy idle equity in their new homes doing nothing but providing a shelter
over their head. That allowed them to accumulate in 10 years
conservatively increased in value from 800,000 to 2 million.
That 2 million now generates 200,000 a year of tax free cash
flow inside their insurance contracts. They have 200,000 tax-free
and they have their mortgages. But the mortgages on 800,000 of
combined mortgages on the 2 retirement homes only uses maybe 25%
of the income that comes off of that that 200,000. So, it's
maybe only 50,000 that after-tax. They are making an $150,000.
I'm just bringing up approximate numbers here. I've done
this many, many times. See, they were underutilizing one of the greatest
assets their own home. Now, that's just real estate. Many times, they had their
money in the market and yet-to-be-taxed IRAs and 401Ks. And I said, "You got to get
it out of the market." See, Wall Street was designed to help your money grow but
most people only earn an average of 3.5%. Because they're
buying and selling the wrong times. When the market starts to go down, they sell.
And then they wait till it comes way up before they buy. And so DalBar who
measures actual investor behavior says, "The average retiree who has their money
in the market only averages about 3.49%." This is what
precipitated the 4-percent rule in the financial services industry. If
you're only earning 3.5, the brokerage firms only want you to
withdraw 4% which is more than you're earning that it won't run
out until you probably have passed away. So, they base it upon your L/E, life
expectancy. That's called the 4% rule. Hello? I want to earn 8% or
10%. Not 4%. So, many people would reposition money in
IRAs and 401Ks to get out of the market because the market is not designed for
income, ii's designed for growth. If you ever ask a broker "When is the best time
to get your money out of the market?" They will always answer "never". See, they
weren't designed to give you predictable income in retirement. Maximum funded life
insurance contracts work. And so, I can have double, triple the income. It's
tax-free. Do a strategic roll out out of those IRAs or 401Ks over a 5-year
period. Look at your real estate portfolio, look at underperforming assets,
money in CDs, in banks where they are paying you a measly 1-2 percent interest.
Increase the safety by 6 notches higher where they put your money and
earn higher rates of return. They pay you 1 or 2 percent and they make 5 or 6 by
putting it into the same insurance companies, where I put my money. So, you
want to bypass the middleman. By repositioning all kinds of
underperforming assets, I have helped many many 60 year olds in 10 short years
accumulate an extra million or even 2 million dollars that generates a 10%
payout that knocks the socks off of where they had that money trapped before
we did that analysis. So, what does this mean for you? So, if you don't have any
existing assets, sometimes people have been wiped out for some reason out of
something totally out of their control. If you're age 60 and you want to retire
at age 70 or maybe 75, you need to seriously look at setting aside 20, 30
percent, maybe 50 percent of your income. So, live on less than what you earn and
start sucking it away because if you can set aside 20, 30, 50 thousand a year or a
100,000 a year, oh, yeah. You can accumulate an extra million and a half,
2 million dollars in 10 short years if you set aside that kind of money. If
you don't have the ability to do that, you need to reposition any assets you do
have as I've just explained. But the key is is you've got to get serious. Because
you've got a short window of time but it's never too late. The key to longevity
is making yourself necessary. So, make sure you stay in motion and have the
health and the ability. You don't just hunker down in a survival motor mindset.
And as you stay healthy, you'll be able to earn money in all kinds of ways. I've
helped people read to find themselves in retirement. And they enjoy fishing. So,
they started teaching people how to fly-fish. Or they started showing people
how to go out and four-wheel-drive or rebuild a hot rod or something and they
actually earned as much or more money in retirement. And so, they didn't need money
out of their retirement savings until age 70 or 75. You need to analyze what is
it that you can do that people will compensate you for while you're sucking
away money and repositioning assets to optimize them. I would recommend that you
put your serious cash into what I call the Laser Fund. Laser is an acronym that
stands for liquid asset safely earning returns. This is the max-funded indexed
universal life insurance contract that allows you to accumulate access and
transfer your money tax-free. This is where I have averaged 11% netting 10%.
Many years I've had more than 11% returns as I was 25% with multipliers as
high as 55%. Other years when the market losses, I don't lose. I may not make
anything that year. But average returns of 10% will allow you for every million
to generate a hundred thousand a year of tax-free income for as long as you live.
Does that sound good? You can do this. I want to gift you a
copy of this book. It retails for 20 bucks. I'll pay for the book. You go to
laserfund.com and you can claim one free copy. I'll pay for the book. You pay
$5.95 shipping and handling and I'll send one out to you.
And you can learn... There's also audio and video versions of this education. But
this is critical to empower you so that in the short timeframe you have left, you
can retire in dignity and not outlive your money and have the freedom you
deserve to go out and do the things you love doing and not have to worry about
where you're going to get the next dollar.