Mistake number two of 10 when saving for retirement.
In this episode, I'm going to address the question, what mistakes do people make when saving
for retirement? This episode will focus on the second mistake out of 10.
So, my name's Doug Andrew and what do I know? Well, I've been a retirement planning specialist now for
more than 47 years. Helping people prepare for a comfortable retirement and not outlive their money.
So, I've seen lots of mistakes that people have made. But in this series, I am revealing the top
10 financial mistakes people make when trying to save for retirement and mistake number two is
thinking you're going to be in a lower tax bracket when you retire.
Folks, that's what people get duped into thinking when they contribute money to traditional IRAs and
401ks. Most people that I know who accumulate any type of a respectable retirement nest egg are not
in lower tax brackets when they retire. The only ones who are are those who didn't say very much.
So, let's talk about this mistake and why that is true. So, many times and to be exact
91% of Americans put money into traditional IRAs and 401ks being told, "Oh, get a tax break on
the contributions", okay it's like the seed money because I've used a metaphor of the farmer and the
seed for decades. If you were a farmer and you had the choice of buying your seed in the springtime
that you're going to plant and you don't have to pay tax on the price of the seed. But you plant it,
you irrigate, you cultivate, you work hard, and in the fall you're going to harvest your crop.
Now, you agree to pay tax on what you sell your harvest for. That's a traditional ira 401k and
91% of Americans I think are duped into thinking that's the best way to go because, "Oh, you'll be
in a lower bracket when you retire". Folks, that has not been true or axiomatic for more than 25 years.
It's because so many Americans are going down the highway of life trying to achieve this destination
of financial independence and they often have one foot on the gas pedal and the other foot on
the brake pedal and they don't even know they're doing it. The foot on the gas is putting money in
tax-deferred accounts, pre-tax dollars to 401ks. The foot on the brake is you're sort of
killing your deductions as you go. Most people pay off their house they don't have that deduction. The
kids are not there anymore even if they move back as adult children you can't deduct them anymore.
You're not contributing money to IRAs or 401k retirement. You don't have that deduction anymore.
If you're a business owner you don't have those deductions anymore and so I've seen many people
even with less income in retirement that are paying as much or more in taxes in retirement as
they ever were paying when they were earning the money. Because their tax deductions are all gone
and so unfortunately they don't know what to do to solve it and they continue all through retirement
sort of like the back nine of an 18-hole golf game of life and they still have one foot on the
gas and the other foot on the brake. Because they don't know how to get out of this rut this tax
trap that they've sort of gotten caught in. So, if you have money in tax deferred IRAs or 401ks.
If you think you're going to be in a lower bracket I'll just be honest with you.
If you're in a lower bracket it's usually because you didn't save very much money. If you've saved
enough by socking away 10, 15, 20, or more of your income to maintain the same lifestyle.
I can almost assure you you will be in the highest bracket ever during your golden years.
So, what are you postponing paying tax for to some future perceived unknown advantage?
I ask audiences this question but before I pose this question to you. If this is intriguing you
and you can think of somebody you ought to share this video with who's making this mistake
be sure and share post a comment click like but please subscribe to three-dimensional wealth this
YouTube channel. I have over 500 educational videos and I post at least five new videos every week
answering in-depth financial questions that people have and I want you to participate and make sure
you don't get sort of left in the dust and miss out. Also at the end of this episode, I want to
gift you a copy of my most recent best-selling book The Laser Fund and you can click below in
order to claim your free copy of this 300 page book. So, what is the question I ask audiences
and I've been doing this for years. It could be a ballroom at a hotel full of 4,000 people and I'll
say how many of you think that taxes in the future will likely be lower? I get nothing but crickets.
How many think they're going to be the same? One or two hands go up. How many of you think taxes
in the long run will be higher? A sea of hands goes up and then comes the wake-up call. Well
then, if you're convinced taxes will be higher in the future why are you continuing to defer
to some future perceived unknown advantage in a nest egg I raise a 401 case
and then withdraw your money later when taxes are higher. That doesn't make sense and they go...
So, are you recommending we switch out we roll over to a Roth? No, a Roth is a step in the right
direction but I've never owned an IRA 401k because of these reasons. But I've never owned a Roth
IRA 401k because my favorite vehicle which I call The Laser Fund has the two benefits
of a Roth your money accumulates tax-free and you can access the money tax. Where you get to harvest
the money tax-free. I'd rather pay tax on the seed and enjoy the harvest without tax. A Roth does that
but a laser fund does it better. But I have way more flexibility. In fact, if you make too
much money you can't even own a Roth. Did you know that and so this mistake people make thinking that
they're going to be in a lower tax bracket. They hit retirement and they have this rude awakening
and they have to pay tax on all this money and it's at future higher tax rates and they don't
have the deductions they used to have and they go, "Whose retirement was I planning anyway?",
mine are uncle Sam's. Because uncle Sam has had a permanent tax lien on all that money in the
iras and 401ks. So what can you do to avoid that mistake? So, if you want to alleviate or correct
the mistake before it's too late. In fact, years ago I released an e-book called baby boomer
blunders and these mistakes were the blunders that baby boomers made and oft times they would
paint themselves into a corner. They would have this tax trap and as a financial strategist as
a tax minimization specialist I would help them free themselves from that tax track. It's like
when we have our cells in our body not at ease that's called dis-ease. Many people had a financial
dis-ease they were not at ease financially because taxes were eroding away at least a third of every
dollar. They started to pull out of those IRAs or 401ks. So I wanted to cure their tax dis-ease their
financial dis-ease. Does that make sense? Well, you have to bite the bullet. You have to get the taxes
over and done with and reposition that money into something that's going to be tax-free from now on.
These are called strategic rollouts. You don't need to use the money. You just get the money out at
today's lower tax rates and reposition the after tax money into something that's going to be tax
free from now on and it's better than a Roth. You'll learn that the laser fund which stands for
liquid asset safely earning returns is the answer to diversifying and creating the foundation for a
tax-free retirement. It's what many savvy cpas and tax attorneys refer to as the rich persons
Roth and you don't have to be rich to own one. You can set one up for 500 bucks a month but
a lot of people they're putting in hundreds of thousands of dollars as they roll it out
not over. Rolling it out of IRAs and 401ks to get the taxes over and done with sooner than later
and then make sure it's tax-free from now on and you'll learn in this book how every million
dollars can generate seventy thousand, eighty thousand, even a hundred thousand a year of
tax free income. Which is usually double and even triple what IRAs and 401ks can generate for you.
So, I want to give you a copy of this book it's actually two books in one.
If you're more of a left-brain thinker you like charts and graphs and numbers you read this white
side. This is 200 pages with all the charts and graphs. If you learn more by stories and examples
you flip the book over and read this one. This is about 100 pages 12 chapters with 62 chicken soup
for the financial soul stories of how the laser fund can be used not only for retirement
but any long-term goal like college funding for your kids and grandkids, your working capital
for your business, emergency funds, real estate management, on and on and on. If you want to use
your whole brain the right brain and left brain read both okay. But go to laserfund.com click below
contribute a nominal amount towards the shipping and handling I'll cover the rest of that
and I'll send out a book to you. There's also options there to listen and learn or watch and
learn if you would like to empower yourself to avoid the second mistake made by retirees.
Thinking you're going to be in a lower tax bracket when you retire.
No, most Americans are in as high or higher tax bracket as they ever were in during
their earning years but you can correct that mistake. You'll learn how in the laser fund.