Reposition assets for tax-free income. In this episode, I'm going to address the question "What
should I do 5 years before retirement?" I'm so glad you're asking that question or you searched
this out on this YouTube channel because I've helped many many people 5 years before retiring
dramatically increase the liquidity safety and rate of return on their retirement assets and
convert to tax-free income for the rest of their life. Are you ready to learn how you can do this?
So, my name's Doug Andrew. I've been a financial strategist, a retirement planning specialist
helping people actually optimize their assets and minimize taxes now for more than 4 and a half
decades. I've been so blessed and honored to have several best-selling books. One in 2007 became
a New York Times and Wall Street Journal number 1 bestseller. It was called Last Chance Millionaire.
But as you stay with me in this episode, if you like to read and study and learn,
take ownership of your future, I have a special gift for you, my most recent best-selling book,
I'll gift you for free at the end of this episode. Now, I want to share with you that at retirement
planning is something totally different than what you maybe did for retirement planning. So,
I'm going to simplify this. Most people who are going to be retiring in the next 5 years or so,
when I sit down with them, I analyze where they have their money. And it generally falls into 1
or 2 or 3 or all 4 buckets. So, watch as I explain these 4 buckets of repositories where most people
have money that they are going to draw from during their retirement years. So, we call these the 4
Retirement Accumulation and Income buckets. Now, most people when they would come to me
and the ideal time is at least 5 years out from retirement, they would be way too top-heavy in
this bucket. This is what I call the investment bucket. This is yet-to-be-taxed IRAs, 401(k)s
usually invested in the market. And sometimes when people come to me and they're already
retired or they're about to retire in a few days and they have most of their money here. I'm going,
"What are you thinking?" See, I would recommend that no more than 30% of your retirement income
come from this bucket. But most people are like 80-90 or more. That's way, way too top-heavy.
Because money in the market, Wall Street was never built to create predictable income. If the market
goes down, retirees are stuck and they they can outlive their money. And so, you don't want to
have all the eggs in that bucket so to speak when you retire. Now, what are the other 3 buckets of
the form? Well, some people have real estate and that's fine. Some people only own their house.
Others have rental properties and sometimes they make mistakes of thinking their entire retirement
is dependent upon rental income and they these paid off properties and then they get stuck
when there's vacancies when real estate markets plummet. And that's what they do every 7-8 years
just like the stock market. So, I would recommend that no more than 30% of your retirement income
come from real estate if you own rental income real estate. So, that means you've got to
start analyzing which properties you're going to liquidate, you're going to get your money out of.
And you don't have to be a landlord anymore when you do this. You don't have to fix toilets
you pick tennis and take out the trash anymore. Life becomes very simple. So, that is one of the
buckets. We look at the guaranteed bucket. This is where people say, "Well, I'm going to get this
much money", guaranteed in their minds in social security. Well, the federal government is in debt.
They owe 130 trillion dollars in future social security and medicare benefits to the people
they've withheld from their paychecks. And they only have about nine months of cushion. Did
you know that? If they stopped withholding from people's paychecks that are workers right now, in
9 months they'd be broke. And so, that system's a little bit scary. But you know people say, "Well,
it's the government. They can raise taxes, they can print money." Well, yeah, then that's going
to cause inflation. But it also could be pensions like a school teacher's pension or firefighters
or what have you. There are also annuities where sometimes people want a guarantee. Now, I've never
owned an annuity. I doubt I ever will. But if you want guarantees, you could put money into
an annuity. And maybe between zero up to 80% of your income based upon your risk tolerance might
be out of this bucket. Now, an annuity, there's only a handful of annuities I would even choose,
they would be indexed annuities. But the magic is if that annuity runs out of money at age 85 or 90,
they must... The insurance company must keep paying you an income as long as you live
even if you live to be 120. So, if you want guaranteed income, you're going to give
up on rate of return a little bit but you might choose an annuity. I would recommend
not very much come out of this. But if you're really not a risky person, maybe up to 80%.
My favorite bucket is this one, the tax-free bucket. Now,
you might have municipal bonds in that. I don't invest in municipal bonds because municipalities
are not being run very well. There's a lot of them that are filing bankruptcy all the time.
So, municipal bonds aren't as attractive or as safe as they used to be.
You might have Roths. Now, Roths are a step in the right direction. But when you watch different
episodes on this channel you're going to hear me say that I've never owned an IRA or 401(k) and I
never will. I've never owned a Roth IRA or 401(k), I never will. It's a step in the right direction
but Roths still have too many strings attached. There's only 2 benefits to Roths.
You fund them with after-tax money because if you believe that future taxes will likely be higher,
a Roth will actually generate about 33% more net spendable income than the same
rate of return, the same amount of money in a traditional IRA or 401(k). Did you
know that? But why would I own a Roth? It has 2 benefits. You accumulate your money tax-free,
you can take out tax-free income. I have those 2 benefits in my favorite vehicle which I call the
LASER Fund. It is the topic of my most recent best-selling book that I want to gift you.
The LASER Fund has always allowed me for over a century in the internal revenue code to accumulate
my money tax-free under section 72(E) of the code. I can access my money tax-free under section 7702.
When I ultimately die, it does something that Roths will never do. It blossoms. It
increases in value and transfers totally income tax-free to my spouse, my kids, my grandkids.
Let me explain that a little bit deeper. I'm 68 right now, if I died in an accident tomorrow,
every million that I would have in my laser funds would blossom to about 2 and a half million
within 3 weeks after I die and transfer to my wife, my kids, my grandkids, at church, charity;
whoever I want to leave it to. People say, "Wow, Roths don't do that." No. Well how much does that
cost? Well, nothing's free but it doesn't cost me anything. It's being paid for with a minuscule
portion of interest that would otherwise go out the window in taxes if I had my money there or
there or even there. See, I like to transfer money over to the tax-free bucket. I would recommend
you strongly consider having 40 to 60 percent of your money in that bucket at retirement. This is
a strategic rollout. I explain this in other episodes, please search them. This isn't a
roll-over. You're not taking money out of 401(k)s and rolling over to IRAs. You're taking money out
of this bucket getting the taxes over and done with strategically over a 3, 4, 5-year period
and taking the after-tax money. You take out money out of these not because you need to live on it.
You're taking it out taking care of the tax at today's lower rates putting the after-tax money
down here where it's growing tax-free at a higher rate of return the rest of your life. And when you
ultimately die, it reimburses you many times what you paid in tax. It's not costing you anything at
the end of the day to do this. What does it mean, are you ready? On this channel, I have a lot of
episodes that talk about a strategic rollout, not a rollover. Again, we're trying to get the money
out of those yet-to-be-taxed IRAs and 401(k)s in today's lower tax rates, get the taxes over and
done with. But number 2, you want to reposition that money into something that's going to be
tax-free from now on earning probably double the rate of return that most IRAs and 401(k)s earn in
the investment bucket. And we're going to earn higher rates of return, it's going to be more
liquid and it's going to be safer. But it's going to be totally tax-free. Do you know that most IRAs
and 401(k)s in the market only average about 3.5%? This is why the financial services industry came
out with a 4% rule, they only want you to pull out 4% rule. My heavens, a million-dollar nest egg in
IRAs and 401(k)s, they only want you to take out 40 grand a year but you have to pay tax on that?
Let's say in a 25% bracket you're only netting 30,000. Those asset managers charge 1% on that
million in asset management fees. If you subtract taxes and the fees, you're only netting 2%
in the tax-free bucket. The Laser Fund, I have earned 8% very predictably for 45 years. Some
years less than that, some years much greater than that. How much better is 8% tax-free
than 4% taxable which is only really a net of 2 or 3 percent after deducting taxes and fees.
Folks, that's 80,000 a year of income versus 40,000 or really only 30 or 20 thousand
after taxes and fees. This is how we've helped many, many people dramatically
increase their net spendable income by double triple and even quadruple.
Another way to put it is, I've helped many people who their portfolios that I've talked about here
maybe we're going to generate 200,000 a year of income, they did really well. They were savers
but it was all showing up on the front page of their 1040 tax return.
In 5 years at retirement planning, we got 120,000 of that income coming out of the tax-free bucket.
Now, they still have 200,000 of income but they only pay tax on eighty thousand. The
IRS knows they're getting the other 120,000 but it's tax-free. It's been
a sacred cow for over a century. If you take 33% tax on 120,000 that I got off their tax return
and the husband or the wife lives 25 years, I just saved them a million dollars of unnecessary tax
just with that one strategy and that's only one of the strategies that i want you to understand. So,
empower yourself. Here's how you can learn more. So, I mentioned my most recent best-selling book
it's called The LASER Fund. It's book number 11. It's flying out of our warehouse weekly. Hundreds
of books go out almost daily. Now, I want you to claim your free copy. If you go to laserfund,
LASERfund.com and you contribute a nominal amount towards the shipping and handling,
I'll cover the rest. You can also get expedited shipping if you want.
If you like to listen and learn or watch and learn there's other options in there. This is
300 pages of charts, graphs, and explanations it also when you flip the book over contains
12 chapters with 62 actual client stories. When you read and study this, you will begin to become
empowered on how you can move and reposition assets into the tax-free bucket. You'll see
one example in here of how we took a couple from the highest tax bracket (they lived in California)
to a zero-percent tax bracket in 5 years. They now have 8 million dollars in their Laser Funds.
They've been earning 600,000 to 800,000 a year of tax-free interest on their Laser
Funds. They don't even need that much. 300,000 is all they can spend. Folks,
this is a game changer. Consider repositioning some maybe all of the money that you have trapped
in IRAs of 401(k)s over to a superior vehicle. Claim your free copy. Study it. And we're here
for you. Subscribe to this channel. Share this video with others. Give them the epiphanies
and insights and we'd be tickled to be able to educate you more on these powerful strategies.