Achieving a Tax Free Retirement

Tax Strategies to achieve a tax free retirement - A Case Study

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[Veronicastyle-]

Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274, 800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.

[jasonpitt]

Looks like this guy sells life insurance.

The LIRP bucket analogy needs one more detail. The water you put in the bucket is no longer your water. If you need more than what drips from the spigot, then you must buy back your own water using a loan or by paying considerable fees.

LIRPs are great for insurance companies, the “financial advisors” who sell them, and very wealthy people who don’t need the money in their retirement. If you’re not in one of these groups, then buyer beware.

Double-check any numbers that insurance salesmen give you. For example, this couple has $1.6M in their IRA at 65 and are broke at 88. Assuming they have no other money saved (they do), no other sources of income (they will have SS), and their investments make 0% (they don’t), then they must spend $70k per year. They only make $100k in this scenario and are able to still save money for retirement, so $70k per year is a generous annual cost of living for this couple. The numbers simply don’t make sense.

The graphs look nice, though. I’m sure they get printed on the highest quality paper for the sales pitch.

[mvman]

I’ve been retired for two years now from a financial advisor role after 46 years. Love seeing your presentation of what I’ve advised my clients to consider and many have done using the IUL tax free bucket. If a client said they loved it, the “accelerated death benefit” too, but didn’t need the life insurance part, I’d pause, smile and say you could always put my wife and I down as beneficiaries on this policy 😎. I purchased the first one I ever placed and still grateful!

[superslyko]

Wow! A lot of information here, good with the bad. My financial planner of 10 years NEVER explained this - the traditional financial advisor. He spent 1 minute explaining the Roth IRA & never mentioned Rule 72T. YouTube is a great resource! YOU are great resource. Subscribed.

[Stacia]

30K in retirement income will trigger 50-85% of the couple's social security to be taxable, depending on how much their combined social security amounts to. And although it is a great idea to put some money into tax free accounts, I believe that your strategy places too much importance on future tax brackets at the expense of current tax savings.

[craigbutcher]

You can't get to zero (12% of X where X minus standard deduction = 0) if you also have NQ income coming in from other assets. You've left off all the NQ assets (i.e, stocks paying dividends, bond interest, maybe rental income) as well of course as any earned income, inherited IRA's with RMD's, annuities... unless you give money away, and even that you can only do to 30% of AGI (for stock etc assets) or a little higher for naked cash. And remember qualified dividends/cap gains calculation will be higher the more NQ you have.

[MarvinLikoPuha]

Great presenatation! Thank you. The LIRP section affirmed a recent random video on my YouTube feed of a gentleman discussing the benefits of Life Insurance investment. The closing quote was perfect in addressing the “good citizen” concern. Now to look for an LIRP. Life insurance that doubles as long term care insurance is something I never knew existed.

[ianmackenzie]

What is the process for taking money out of a LIRP?

[goodnewsfromgod-bybob]

Great information and I appreciate you sharing this. Thank you

[huntingscopes]

Awesome; wish we were in same situation with the exampled scenario. However, sure Lane Martinsen can make it happen for different people with all sorts of situations. Thank You and Looking Forward to learning more.

[Zeric]

I don't expect people who have been actively saving for retirement for many years (the type of people would be focused on saving taxes in retirement), look like the example couple. Most people I know around this age who have been actively saving toward retirement, have a fairly sizable 401K, are already maxing out their Roth IRA (if they can contribute at all), don't have a large traditional IRA, do have retail investment accounts generating a growing amount of income and dividends or rental real estate, and are likely to be inheriting IRAs that will need to be liquidated in 10 years. That's not to say they can't make some good moves also, it's just the example couple doesn't seem very "real" when considering the type of person most concerned about taxes in retirement and seeking videos like this.

[tollermaus]

It looks like you're forgetting the impact of the IRA withdrawal on Provisional Income as it determines taxability of Social Security. The threshold isn't the standard deduction but $44K of Provisional Income (AGI+1/2 of Social Security), which is NOT indexed for inflation.

[andersonandrew]

What do you think of the Buy Borrow Die strategy? Throw a large amount into VOO shares, never sell the shares in your lifetime, and access the part of the liquidity tax-free through a margin loan that will never be paid back? Heirs get a step up in basis upon death, and the IRS never gets a dime. Also, the interest is tax deductible if used for investment purposes like a business or investment real estate. Thanks

[howardgilbert]

WOW. Thank you for such a clear explanation.

[felisak]

This is a great information! I am glad my financial decision is align to your suggestion. It pays off to educate yourself. I agree with you not to deferred paying taxes. I would rather do it now coz you don’t know what’s in the future. At least when retirement comes I know I have less taxes. I also obtain that life insurance retirement plan under Universal Index Fund. Great presentation and worth sharing!

[EddieVelez-bkdv]

I’m confused on how a standard deduction allows you to take $30k annually with zero tax?

[willlafreu]

Great educational video and thanks for sharing this with me

[kathycolkitt]

Excellent video My question be at 62 and a million in assets such as S&P 500 traditional and Roth IRAs I don't have those 15 years to take 25, 000 out What is a good strategy to get it into the tax rebucket. My other question is how do you start the tax-free bucket? Am I able to do that on my own if I have my funds at Fidelity can I say I want to open a tax-free bucket and start putting those funds in there? How is it managed and does it grow?

[matthines]

we are married couple, age 61/62 with nearly identical parameters to your example, is it “too late” for us to implement the Roth plans in our case if we planned on retiring at 65 (we would love to retire at FRA/67, but are worn out now…)…???

[tomkarpus]

This strategy does not work for professionals with decent compensation and working for a company that provides a 401k with match. It also is a bad strategy if you are in a higher tax bracket now than you will be in retirement.