- Perform a strategic roll-out,
not rollover to increase retirement income
far greater than most IRAs and 401ks.
In this episode, I'm going to address how a max funded IUL
can generate far more retirement income than IRAs and 401ks.
Get ready.
By the end of this episode,
you are going to understand the difference
between a rollover and a strategic roll-out,
how to increase your net spendable income
by double, triple, even quadruple.
I'm gonna give you examples and you're gonna be blown away
with how you can have 40 to 60% or more
of your retirement income not even show up
on your 1040 tax return.
(upbeat music)
I'm Doug Andrew.
And I've been helping people optimize their financial assets
and minimize taxes now for more than 48 years.
I started in 1974.
And in doing so many people as they prepare for retirement,
ask me, "Doug, where do you put your serious cash?"
And I go, "Oh, without question,
I would recommend that 40 to 60% of your income,
not even show up on your 1040 tax return."
And they go, "How do you do that?"
So I'm gonna give you some examples here
and it's gonna blow you away.
So stay with me to the end of the episode.
And while I'm talking, if you can think of somebody
that ought to watch this, be sure and share,
click like, post a comment, but stay with me to the end.
I wanna gift you a copy of my most recent best-selling book,
"The LASER Fund", 300 pages of information
that will connect the dots for you.
Now, I like to compare a max funded IUL
to a Financial Swiss Army Knife.
And it has all kinds of uses.
Most people would come to me to use it
for retirement planning.
But I'm gonna shift over
and talk about general tax reduction
because a lot of people get into tax traps
with their money in tax deferred IRAs and 401ks.
And I think they were duped into being told,
"Oh, defer, defer.
And you'll likely be in a lower tax bracket
when you retire."
Hello, that has not been true
or axiomatic for more than 25 years.
Most people who save very much
have any type of a respectable retirement nest egg
are not in lower tax brackets.
If you're in a lower tax bracket when you retire,
it's probably because you didn't save very much.
So I'm going to assume if you're watching this episode,
you're a saver and you're socking away
at least 6% of your income,
but more like 10, 15, 20% or more of your income.
Okay.
You're my kind of person.
So let's talk about how people usually have assets
when they approach retirement.
Now, there are four places that a lot of Americans
may draw from for income during retirement.
Not everybody draws from all four of these.
But a lot of people have their money
and investment income into traditional IRAs and 401ks
usually invested in the market.
Other people, they own real estate.
And so they have rental income or what have you from that.
Then there are people who are very conservative
and they might have a defined benefit pension.
They've been teaching school.
Maybe they rely on social security.
If not, maybe they consider an annuity
that will give them a guaranteed income
for as long as they live.
Even if their money runs out,
they will not run out of income with an annuity,
but there's trade offs.
See.
I've never owned an annuity.
I doubt I ever will,
but for some people it may be an answer.
But this is my favorite.
It's the tax-free income category.
It's the least understood.
And it actually has the greatest impact.
So let's convert these into like buckets of money.
When we talk about the investment bucket,
this would be yet to be taxed IRAs and 401ks,
usually invested in the market.
A lot of times, people, when they approach retirement
are way too top-heavy in this one.
They have 80 to 90% or more of their money in the 401k
where they worked or in IRAs.
And I usually go, "What are you thinking?"
And they go, "Well I've been busy working.
I was just following what everybody else was doing."
I go, "Yeah, you've got a tax trap now.
You're gonna be taxed through the nose
the rest of your life."
And so they go, "Well, what can we do?"
So I'll show you here in just a moment
how we cure that or free them from that tax trap.
But this is where most Americans
have too much money at retirement.
See, at retirement planning is something totally different
than maybe what you did for retirement planning.
Now some people do have real estate and they rent it,
but you know it's amazing how many times people
as they approach retirement are sort of sick
and tired managing properties and fixing the toilets
and evicting the tenants and taking out the trash.
And they're sort of trapped because if they sell it,
they have to pay a capital gain tax.
Well, it sounds like a lot of the tax revenue politicians
like President Joe Biden,
as of the recording of this episode,
he's gonna do away maybe with the step-up
and basis on long-term capital gains and so forth.
We'll see.
But see, if you're relying on this,
I would recommend that no more than 30% of your income
come from real estate cash flow
because real estate can drop in value
and you can have vacancies and so forth.
Now, again, this orange one
is where you get a guaranteed amount of income,
but you're gonna suffer usually
because of the rate of return.
And that could be an annuity
or it could be your social security,
which doesn't keep up with inflation
or a defined benefit pension,
which is supposed to be increased by the cost of living,
but the CPI, consumer price index,
is sometimes 1/3 of what the real rate of inflation is.
Now, this is my favorite.
It's green because it's a tax-free bucket.
And municipal bonds are tax-free,
but I don't recommend those.
They're low yielding.
And a lot of municipalities
are filing bankruptcy these days.
The other might be a Roth,
but I've never owned an IRA and 401k and never will,
but I've never owned a Roth IRA and 401k, and I never will.
Why would I mess around with a Roth
when I have the two benefits of a Roth
and four additional benefits Roth will never have.
I'll highlight those in just a few minutes.
Okay.
Now here's what I am recommending.
So many times people are way too top-heavy
in this purple bucket, yet to be taxed IRAs and 401ks.
And so I usually recommend that five years
before retirement, but it's never too late,
you can already be retired
and still do a strategic roll-out,
but ideally five years before retirement,
you start to roll the money out of these IRAs and 401ks.
Why?
Not because you need the income.
You wanna get it out the taxes over and done with
sooner than later in today's lower rates
and reposition down here to the green bucket
so it's tax-free the rest of your life.
And when you ultimately pass away,
you'll get reimbursed or your spouse will get reimbursed
for the taxes you payed during the roll-out.
And people go, "Wow, I've never heard of this before."
Well, we've done this thousands of times
and save people a ton of unnecessary tax.
So again, I would recommend
that no more than 30% of your money be in IRAs and 401ks
in the market at retirement.
I would recommend no more than 30% come from real estate
if you like real estate.
I would recommend, based upon your risk tolerance,
anywhere from zero, maybe up to 80%,
if you're super conservative, could come from this one.
But I recommend that 40 to 60% of your income
be totally tax-free,
not even show up on your 1040 tax return.
Now, the IRS will know you're receiving it.
They know everything.
But they're gonna know it's tax-free
'cause it's been that way for over 108 years
in the internal revenue code with three sections.
You can search about these on this channel.
So let me give you an example.
Sometimes people will come and they'll say,
"Wow, Doug, we have save, save, saved.
We have 2.6 million between us in our IRAs and 401ks.
We feel like we can conservatively pull out
about 160,000 a year out of our IRAs and 401ks
without depleting principal."
I go, "Well, great."
They might have 40,000 in a school teacher's pension
or social security.
So they're planning on 200,000 of income and they say,
"What do you think?"
And I go, "Well, there's one problem.
All 200,000 is going to show up on your 1040 tax return."
And they stop and they go, "You mean, there's another way.
Where have you been Doug?"
And I go, "I've been here all along.
You've had your blinders on just working hard
and putting money in the company's 401k.
So you're gonna pay 54,000 in taxes.
You're gonna net 146,000 to buy gas and groceries,
but inflation is going to take its toll on that.
Here's what I would do.
In the next five years we're gonna get it out of there.
So let's just advance forward.
In five years for these people,
they still had 200,000 of income,
but 120,000 of it now is off of their 1040 tax return.
It's over in the tax-free bucket.
So now they only have to pay tax on the remaining 80,000.
They only have to pay tax of 21,000 on 80,000 of income,
not 200,000.
They have a net of 178,000 to buy gas and groceries.
We actually save them on that about $30,000 a year
in unnecessary tax.
Now, you times that by 20 years
between the husband and wife life expectancy.
Many times we save people 800,000, a million,
1.2 million of unnecessary tax.
We saved two school teachers a quarter of a million
of unnecessary tax doing this.
I saved a real estate landlord, $750,000 of unnecessary tax,
and a husband and wife, couple, both physicians,
I saved them 1.2 million of unnecessary tax.
They took that and put that into a new IUL contract policy.
And that has been generating 100,000 a year
of tax-free income that they can choose to use it
instead of just giving it to the government
in unnecessary tax.
Folks, this is incredible.
This is called a roll-out, not a rollover.
A rollover is like going from the frying pan into the fire.
That's taking money in 401ks and rolling it over to an IRA.
And then deferring, deferring until you're age 72
and then taking out RMDs, required minimum distributions,
which is I think the worst advice for most Americans.
Why do you wanna string it out?
You're not saving tax.
I have software that shows people the darkness of the night
if they do that.
How much they'll pay in tax
if they string it out during their life expectancy,
their spouse's life expectancy,
and then leave it behind to your children
and they have to pull it out
and pay tax within 10 years now.
It is the worst way to leave money when you die.
Most savvy CPAs will agree with me.
So people say, what about a Roth.
Roths only have two benefits.
You fund a Roth with after-tax dollars
and your money accumulates tax-free.
Okay.
You can withdraw your money income tax-free.
Well, laser funds,
IUL policies have had that provision for over a century.
But there's four additional benefits Roths don't have
that IUL does have.
With your contributions you can put in larger sums of money.
I can design an index universal life
to accommodate 100,000, 300,000 a year.
You can't do that with a Roth.
You can only put in a certain dollar amount
or a certain percent of your income.
I can put in 300,000 if I'm a business owner.
I don't have to.
I can put in just 30,000.
I can make up the difference of 270,000
anytime I want down the road.
You can't do that with a Roth.
If you don't use the room in a given tax year,
you lose it forever.
But what if you need to access money?
If you touch your money in a Roth in the first five years
or before you're age 59 1/2, there's a 10% penalty.
With a laser fund I can put in 300,000,
I can access 200,000 four days later if I wanted to.
There's no IRS penalty.
I have more liquidity and there's no strings attached.
Why do you want that restriction that a Roth has
because it's a qualified plan still?
Now here's the key.
When you use indexing, which Roths don't use,
I get to participate when the market goes up
and not lose when the market goes down.
And so this will protect you
because your money is not at risk in the market.
You need to learn about that on this channel.
And the last thing is, when you ultimately die, it blossoms.
What do I mean by that?
Okay.
I'm in my 70th year right now.
If I died in an accident tomorrow,
every million I would have in my laser funds,
my IUL policies, would blossom to about 2 1/2 million
and transfer income tax-free to my wife, my kids,
my grandkids, a church, a charity, whoever I want.
There's not a Roth around that will do that.
And people say, "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 unnecessary tax.
So this is the beauty behind it.
If this is intriguing you,
you need to read and study this book.
It's my 11th book.
It's called "The LASER Fund - How to Diversify
and Create the Foundation for a Tax-Free Retirement".
And so this is how you can claim your free copy.
Go to laserfund.com, or click on the link below.
And you contribute a nominal amount
towards the shipping and handling.
I'll cover the rest of that cost.
I'll fire out a hard copy to you.
There's options there to listen and learn, watch and learn.
There's even an 18 hour masterclass
if you want to watch and dive deeper
than the book takes you.
But be sure and check out
some of that virtual events, webinars,
and retire by design courses we teach off-times online.
But make sure you claim your free copy.
Here is to your brighter future.
I want you to save unnecessary tax.
(upbeat music)