- Don't be fooled.
Your IRA or 401(k) is not just your money.
In this educational episode, I'm going to address
what is the biggest shocker when people take money out
of their IRAs and 401(k)s.
You're gonna be surprised perhaps.
The negative impact
of the huge bite that Uncle Sam takes out
of your money when you retire.
(lively music)
So I'm Doug Andrew.
I've been a financial strategist
and retirement planning specialist now
for nearly five decades, helping thousands
of Americans prepare for a comfortable retirement
so that they will not outlive their money.
Well, I have discovered
that most Americans outlive their money
due to the negative impact of taxes, inflation
and market volatility.
Now, in this episode, I'm gonna talk about taxes.
That's the number one danger that cause most people
to outlive their money.
So many times when people would come
to me at retirement,
because at retirement planning
is something totally different
than maybe what you did for retirement planning.
In other words, for retirement,
a lot of people, I think, are duped, putting money
into traditional IRAs or 401(k)s invested in the market.
And when they would come to me maybe five years
before retirement, I'd go, what are you thinking?
Because Wall Street was not designed
to create predictable income, it's too volatile.
And so many times people thought they were gonna be
in a lower tax bracket when they retired, but they're not.
If they're savers, they find themselves
in as high or higher tax bracket
as they were ever in during their earning years.
And during those years that they were socking away money
in tax-deferred accounts,
they were actually killing their deductions,
paying off their house.
The kids are gone.
If they move back in as adults,
you can't deduct them anymore.
If they're business owners,
you don't have those deductions anymore.
You probably sold your business
and you're not contributing money to IRAs
or 401(k)s in retirement.
You don't have those deductions anymore.
And Congress keeps spending money.
And so they raise taxes directly or indirectly.
So when people would come to me, I would tell them, "Okay,
I want you to bring me your after-tax IRA
and 401(k) statements,"
and they'd go, "Our after-tax statements?"
Now, I knew they didn't have those.
I said, "Oh, I'll calculate that for you when you come."
Well, they would come and show me
let's say a million dollars saved in IRAs or 401(k)s.
And I'd say, "I got bad news for you.
That's not all your money.
Only about 2/3 thirds of that is your money.
Only about, you know, 650, 700,000 of that is your money.
If you pulled out, you know, $75,000 a year,
you're only gonna about 50,000 to buy gas and groceries,
prescriptions and golf green fees
because Uncle Sam is gonna take about 1/3 of this."
So a million is really only, you know, 700,000 your money.
If you pull out 75, only 50,000 is what you get to use
to buy gas, groceries, prescriptions
and golf green fees.
And so sometimes when people would show me their statements,
it would be like this sumptuous
Subway hoagie sandwich depicted here on the left.
And then when I got through showing them,
this is what it looks like after tax.
Pretty unappetizing, right?
Yeah, even if this were a pizza on the screen,
Uncle Sam is gonna come in during your golden years
and help himself to a bunch of wedges out of your pizza.
Well, this is what a tax-deferred IRA or 401(k) is.
You agree to fund it with tax advantage dollars,
pre-tax dollars or tax deductible contributions in an IRA,
and they allow you to defer the tax until you retire
and then you thought you were gonna be in a lower bracket.
No, that's normally not the case for people who save.
And so then you agree to pay tax
and then people run out of money in retirement due to taxes.
And then you add on top
of that inflation and market volatility.
And so if you haven't noticed,
uncle Sam wants some of your money when you earn it,
when you save it, when you invest it,
when you spend it, when you die tax, tax, tax.
Now because of irresponsible government spending
and the printing of money,
they have this appetite for your money.
Now, truth be known, see, the government sometimes,
they have this appetite for spend, spend, spend.
So for example, during COVID-19,
the government actually shelled out
about twice as much as they bring in in income.
And so they gave unemployment benefits and what have you.
Yeah, it helped people, what have you,
but it was money they didn't have.
And so they printed money
at a rate that they have not printed ever, ever before.
And then they have to raise taxes
because when they spend more than they bring in,
they have two options.
They either raise taxes or print money
and they did both.
Let me put it in simple terms.
During COVID-19 in 2020, for example, the IRS brings in,
that year, their gross revenue was about 4 trillion.
Now, they refund about 800 billion in tax refunds.
And so they would net 3.2 trillion.
They spent double that.
Now, if you made $100,000 dollars in a year
but you spent 200,000, man,
you're in trouble, right?
Well, instead of figuring out how to live
within their means, the next year they said,
"Oh, we have a great excuse, this pandemic,
let's pass a whole bunch of other spending
while we're in the mood, and American taxpayers
are ready to go for it.
And so they passed a whole bunch of other stimulus spending.
And so basically, all of the packages they spent,
they're going to end up spending
about three and a half times more
than they bring in about, you know, nine, 10, 11 trillion.
Again, if you were making 100,000
and you spent 350,000, what would you be forced to do?
You would probably have to file bankruptcy.
Well, the government doesn't do that.
They print money and that causes inflation and they tax you.
And when they tax people, and inflation is like a hidden tax
when all of a sudden you have to have more
and more money to buy the same gallons of gas
and loaves of bread.
This causes people to have to withdraw more money
out of their IRAs or 401(k)s.
This causes retirees to outlive their money.
And so this is a dangerous situation to be in.
And if you haven't noticed because of this,
Uncle Sam is having to take a bigger
and bigger piece of the American taxpayer's pie.
So what I've been doing
for years is helping people protect themselves
from the negative impact of taxes,
especially during their golden years, by getting money out
of those yet to be taxed IRAs or 401(k)s,
get the taxes over and done with sooner than later
'cause so many Americans I think are duped into deferring,
deferring until age 72
and then taking RMDs required minimum distributions
because the government continues to get a piece
of your retirement savings the rest of your life
and your spouse's life, and anything you leave behind
to your kids, they get a piece of that.
Why would they wanna kill a partnership
where they have a permanent tax lien
on those IRAs or 401(k)s?
I would recommend you get the money out
and the taxes over and done with.
And so this is called a strategic rollout, not a rollover.
You're getting the money rolled out
of those IRAs or 401(k)s,
the taxes over and done with
in today's lower rates and repositioning that money
into something that's gonna be tax free from now on.
Well, my favorite vehicles is a max-funded
indexed universal life insurance contract
where your money is protected from market volatility.
You're able to benefit when the market goes up
but not lose when the market goes down
because your money is not at risk in the market.
You're using a strategy called indexing.
And I can show you how you can learn about this
but it's totally tax free.
I've been able to accumulate, access
and transfer my money tax free
and earn average returns of a little over 11% average,
and net 10, meaning that there's only 1%, which is the cost
of the insurance that the IRS says has to be there
in order for it to be tax free
so that every million bucks in an IUL contract
can generate $100,000 a year
of tax-free income without depleting principle,
which is far better than having money in the market.
So if you wanna learn how to do this and you wanna learn
about max-funded IULs structure correctly
and funded properly.
If it is, it is deemed a LASER fund.
LASER, that's an acronym that stands
for Liquid Assets Safely Earning Returns.
This is my favorite vehicle.
If you wanna learn more about it
and indexing, which is chapter six in this bestselling book,
this is book number 11,
it's been flying off of our warehouse shelves.
I'm gonna gift you a copy of this 300-page book.
Sure, you can go to Amazon and pay 20
or more dollars to buy it, but I'll gift you a copy.
It's actually two books in one.
This side is about 200 pages,
14 chapters with all the charts and graphs and explanations
if you're a left brain learner.
If you're more of a right brain learner,
you flip it over to this orange one.
This is about 100 pages,
12 chapters with 62 actual client stories
of how a properly structured IUL can be used for all kinds
of financial goals, like the dream solution for retirement,
college funding for your kids and grandkids,
working capital for business, real estate management,
emergency funds, all kinds of solutions.
And if you wanna use both your left and right brain,
I would recommend you read both books.
But you claim your free copy by going
to laserfund, laserfund.com or click on the link below
and you contribute a nominal amount
towards the shipping and handling.
And I'll cover the rest of that cost and I'll pay
for the book.
I'll fire out a hard copy to you and if you want to listen
and learn or watch and learn, there's audio
and video options available for a nominal fee.
Check out the free educational webinars we teach
on a weekly basis.
There's no charge and you can even schedule an appointment
at no cost or obligation with an IUL specialist to see
how a property structured IUL policy can perform for you
so that you can have your money be protected
from the negative impact of taxes.
(lively music)