- Win the Race to financial independence.
In this educational episode, I'm gonna talk about
the best way to become a millionaire or multimillionaire.
Get ready because most people are running this race
and they're only walking or crawling, maybe jogging.
I want you to sprint towards the finish line.
(bright upbeat music)
So I'm Doug Andrew.
I've been a financial strategist
and retirement planning specialist
now for nearly five decades,
helping people optimize assets and minimize taxes.
Now in this episode, I'm gonna talk about
asset optimization retirement strategies.
And I'm going to compare five different ways
that most people save for retirement.
So I've often called this the million dollar dash
'cause I wanna set the goal of, let's say,
have a million bucks net, that's after tax,
that you can use for a retirement nest egg.
So what's the best way to accumulate a million bucks
that you can use after taxes and everything, okay?
Now, these are simply the five different ways
that most Americans save.
And I'm gonna compare this in a moment
to different phases of retirement planning.
But usually when I'm talking to people,
it's helping them understand, okay,
where are you right now financially?
And let's get super clear on where you're wanting to go.
Well, usually they wanna achieve financial independence,
whatever that is.
Let's just say it's to get a million dollars
or 10 million or whatever that is your money.
So how are you gonna get there?
Most people are trying to achieve this,
and they're either crawling, walking, maybe jogging.
I'm gonna show you how to sprint
and why the winner is an asset optimization retirement plan.
So are you ready? Here we go.
Let's talk about the first two ways.
There are four phases of what I call retirement planning.
So every one of these has four columns.
The contribution phase, the accumulation,
distribution and transfer.
Because when we set aside money
for a future goal like retirement,
we have the contribution phase
where we're contributing money, okay?
And sometimes we get tax advantages in that,
sometimes we don't, there's trade-offs.
This overlaps the accumulation phase.
And this is where hopefully your money
that you're setting aside is growing
with dividends, interest or whatever.
We hope that it's accumulating and growing.
And then someday we're gonna start accessing that money,
withdraw income.
Now, too many people go into withdrawal
when they hit this phase because they didn't realize
that they were gonna be paying so much in tax.
And so that's the distribution phase.
And then the last phase is the transfer phase
because most of us usually leave behind something
when we die,
that would've sustained us had we lived longer.
And so a lot of people don't think about that phase,
but I like to look at all four.
So let's look at these five different savings alternatives
and see which ones are very poor,
which ones are fair and good and better and best.
So the very first way that I alluded
to is crawling towards the finish line.
This is where you're taking money that you earn
and you're paying tax on the interest
or dividends every year.
In fact, this is the most common way Americans save,
and it's the worst way
because you're taking after-tax dollars
and putting it into, you know, mutual funds
or banks or credit unions,
or you're paying tax on that every year.
And so you're paying tax
on any of the growth every single year.
You're funding it with after-tax dollars.
It's taxed as earned.
Any of the gains, you pay tax on.
And when you leave it behind, it's taxed.
It's taxed, taxed, taxed, taxed. Four red circles.
Worst way to save, and yet the most common way to save.
It's like crawling towards the finish line.
Let me just put it this way mathematically.
If you were to have a dollar double 20 times,
to 2, 4, 8, 16, 32, 64,
a dollar doubling about 20 times
will grow to $1,048,000.
But if it's tax as earned, in a 25% tax bracket,
a dollar doubles to $2, you pay tax of 25 cents,
you now only have a buck 75.
If that buck 75 doubles to 350 and you pay tax on that,
guess what you'll have instead of a million bucks, $72,000,
7.2% of what you could have.
That's why it's crawling, okay?
In a 33% bracket, you'll only have 27,000 or 2.7%
of what you could have.
That's why it's like crawling, okay?
Now the the next best way would be walking.
Now, I wouldn't recommend this one either.
Why would you wanna walk to the finish line?
This is where you take after-tax money
and you put it into a tax-deferred account
like an annuity, okay?
Now an annuity is simply a savings account
with an insurance company.
Your money is tax deferred, but when you turn on the income,
it's now taxable and it's taxed LIFO, last in first out.
Simply put, if you were to put, you know,
$500,000 into an annuity and you started to turn on income,
let's say 10%, most annuities are not earning that.
That means that when you start pulling out $50,000 a year,
if it's earning 10%,
you have to pay tax on that 50,000
because the last money you're earning, your interest,
is the first money that's coming out.
Only if you were to dip into the principal,
would that be tax free because you are now dipping
into the principal.
That's LIFO tax treatment and most annuities are taxed LIFO.
So you're funding that with after-tax dollars,
it's accumulating tax deferred,
but as soon as you turn on income,
it's now taxed and it's taxed when you transfer it
to your heirs maybe with a state tax
or they have to pay income tax on any of the growth, okay?
So that's only one green circle,
and that's why I call it
like walking around the racetrack.
And I can show you this mathematically.
It's better than this one, but it's not
by far a good or better or best way.
So let's go to the next way.
This would be like jogging around the racetrack
to that goal of financial independence.
This is where most Americans I think are duped
into taking pre-tax dollars
and getting a tax break on the seed money, so to speak.
If you were a farmer and you had the choice
of buying your seed in the springtime
and you didn't have to pay tax,
but you plant, you cultivate it, you irrigate it
and later on in the fall, you harvest your crops
and now you agree to pay tax
on what you sell your harvest for.
That's a traditional IRA or 401k.
This is where you're putting in pre-tax dollars
or tax-deductible contributions to an IRA.
It accumulates tax deferred.
But then later when you start taking out,
the income is now taxable.
If you had a million dollar nest egg and it's earning 10%,
you pull out 100,000, you pay tax of 25%, 25,000,
you're only netting 75,000.
In a 33% bracket, you're only netting 67,000.
Well if you need a 100,000 net after tax to buy gas,
groceries, prescriptions or golf green fees,
you have to pull out 50% more money in a 33% bracket.
Did you get that?
You have to pull out 150,000.
Pay tax of 1/3 50 to net 100.
A million dollar nest egg will be totally gone
drained dry in 11 years.
So you get two green circles, that's like jogging
with the wind at the back at the beginning of the race.
But now you've got to pay tax on the back end
and that's why people outlive their money
'cause they're paying tax during their golden years
and they thought they were gonna be in a lower bracket
and they're not.
And they usually killed
a lot of their deductions along the way.
And because of irresponsible government spending
and the printing of money and Congress keeps raising taxes,
they tax the people who have the money.
That's these people, okay?
So that's jogging with the wind at the back
at the beginning of the race.
You get a tax break on the contributions,
but during the distributions,
now you're running against the wind.
Now the other method would be maybe like a Roth.
This is where you're funding a Roth with after-tax dollars
and it accumulates tax free and you can access it tax free.
But I've never owned a Roth.
I've never owned an IRA of 401k, never will,
but I've never owned a Roth
because Roths only have two benefits.
You fund it with after tax-dollars,
it accumulates tax free and you can take it out tax free,
but you don't get the third green circle.
When you die, it doesn't blossom
and transfer income tax free to your heirs.
What I mean by that is my favorite vehicle,
which is an MFTA, Max Funded Tax Advantage
Section 101a alternative.
That's a section of the Internal Revenue Code
that allows you to leave behind the money tax free
and it blossoms.
I'll simply say it this way.
If I died in an accident tomorrow,
every million I would have
in my Max Funded Tax Advantage insurance contracts,
structured correctly and funded properly,
if they are structured correctly,
they are deemed what I call a LASER Fund.
And I'm gonna gift you a copy of this book
at the end of this episode so you can learn more about this.
And so it means that it would blossom.
Every million I would have in my portfolio of LASER funds
would blossom to about 2 million
and transfer tax free to my heirs when I die.
That doesn't cost me anything.
It's being paid for with a minuscule portion of money
that would otherwise go out the window in unnecessary tax.
And so by using the LASER fund, I get three green circles.
Three green circles is better than two or one or none, okay?
Now what I'm talking about here
is sprinting towards the finish line.
And you do that by getting four green circles.
Four green circles means that many times
as a tax strategist, I've helped people maintain
or resurrect tax deductions that they have been killing
by getting out of debt the wrong way,
sending extra principal payments
against their mortgages or whatever.
Or by resurrecting deductions on their rental properties
and learning how to make three times the amount of interest
than you're paying net after tax on a mortgage and so forth.
This is employing the three marvels of wealth accumulation
I talk about on this channel.
Compound interest, tax-free accumulation,
and safe positive leverage,
the ability to own and control assets
with very little or none of your money tied up
or at risk in that asset.
So these are strategies where you can have
four green circles.
Four green circles will give you 50 to 100%,
sometimes 2, 300, 400% more in net spendable income.
It will generate far more money, it will last longer.
You can live to be 120.
So that is sprinting towards the finish line.
That's four green circles, instead of three green circles.
But if all you do is three,
that's better than two with a traditional IRA or 401k.
And a Roth is only two green circles on the backend,
which if you think taxes are gonna be higher in the future,
a Roth is usually a better choice
than a traditional IRA or 401k.
So I want you to learn more
and I would love to gift you a copy
of my most recent bestselling book.
It's book number 11.
It's been flying off of our warehouse shelves.
It's titled, "The LASER Fund."
It's actually two books.
And one, this side is about 200 pages, 14 chapters
with all the charts and graphs
and explanations for the left brain learner,
of how to diversify and create the foundation
for a tax-free retirement and have four green circles, okay?
Sprint towards your retirement goals.
Have a million dollars faster, sooner
better than the other methods.
Now if you learn more by stories,
you flip it over to this side.
This is about 100 pages, 12 chapters
with 62 actual client stories
that have implemented these asset optimization strategies
for retirement and all kinds of financial goals.
If you wanna use your whole brain,
right and left brain, read both of these books,
but you simply go to laserfund, L-A-S-E-R-F-U-N-D.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
and I will pay for the book.
I will fire out a hard copy to you.
And when you're in that site, there's options there
if you like to listen and learn, or watch and learn,
check out the educational webinars that are free
that we do on a regular basis.
You can even schedule a time to talk to an IUL specialist
to see how a LASER fund
can help you sprint towards financial independence
in your particular set of circumstances.
(bright upbeat music)