If I had a donut for every time I heard someone say, “I’m 50 years old and need a better plan” I’d have a ton of donuts. Let’s get real for a few minutes, OK?
Transcript: Hi this is Jeff Brown the “BawldGuy”. Today, we’re going to talk about what it’s like to be almost fifty years old and suddenly realize that whatever you’re doing to get your retirement in order, it’s just not producing the result you wanted. Your plan just ain’t cutting it. Let’s take a look at what most people do and then we’ll talk about what the first things you should do to correct it. Now, when you’re almost fifty, you have to realize that time isn’t as much your friend as it used to be, right? If you want to retire before you’re sixty-five, sixty-six, that principle is even magnified. What you have to do first of all is start out understanding, you got to make time your buddy. You got to stop doing what got you this far and … look, it’s what keeps you up at night, right? That it’s failing. Let’s take a look at the main common denominator people in their mid to late 40′s have in common, is their 401′s and their IRA’s. Now look, I know everyday loves them. I know their soul. I know everybody talks about my employer matches this. My employer matches that. I say this a lot but I can’t say it too much, why don’t you tell me about the dozens and dozens of people you know with employer matches that have retired incredibly well and you don’t get to see them anymore because they’re always on cruises? They’re not. It’s because it doesn’t work. Now, let’s talk about why I say they’re literally engineered to fail. Here’s why. I know this is cynical, but 401′s for the most part with one example, you know I love Solo 401k’s. We don’t need to get into that now. But 401k’s and IRA’s are not meant to be part of your retirement plan. They were meant from the start and they were engineered to be Uncle Sam’s retirement plan and the boomer generation was the one they saddled up. Let me be exactly clear on why. Don’t let me get away with just making that claim. Take somebody who started in 1980 at thirty-five years old. They got thirty years to go and in 2010, supposedly they were ready to retire, maybe 2015 at 65. They kept putting more and more money each year as their career progressed. They made more money. They put more money in. They invested in whatever the company’s advisor said to do. They did everything possible. They had up years. They had down years. They had flat years. It all happened. They probably saved anywhere from $500 to $3,000/$4,000, sometimes even $5,000 a year in taxes because of the shelter each year’s contribution gave it to them by IRS regulations. Now, fast-forward to 2010 or ’15, and where have they gotten? Most people at fifty-eight years old have less than six figures in their IRA or their 401k. Come on people, that’s not happening. Let’s say you’re one of that 1%. Let’s say you’ve got $1 or $2 million in your 401k. Good for you. It’s not going to happen, but if you did and you say you got a million bucks and you’re really good, I’m going to make 8%. You’re not. Let’s say you did. If you live in my town of San Diego and you’re making 8% on a million bucks, you’re making 80 grand a year. You’re at the top of the California tax bracket at forty-eight. After that, you’re paying 9.3%. Whatever the Feds is going to tax you on is going to happen. You free and cleared your house. There’s no grandchild deduction. AARP has failed us on that one completely. Now, every April 15th, you come to the tax table at the IRS building completely naked of tax shelter. Every single dollar you make is taxable so that in five, ten years, sometimes twelve or fifteen, people have paid more taxes than they saved in thirty or forty to get there. Why would you do that to yourself on purpose? Instead, stop doing what woke you up at 2:00 the last five nights. What you want to do is take that money. Stop putting it in. It’s good money off the bad. Think of other ways that you can invest that money that’s going to do better. How much worse could it be? The Daubert Corporation says that the last twenty years, the average American has averaged less than 3.5% in their 401′s and IRA’s. That’s twenty years at under 3.5%. You think you’re going to retire on that? You think … and furthermore, all these stuff about averaging 4% in retirement, if you think you’re going to average 4% when the last twenty years you haven’t even made it up to 3.5%. Who does that math? Make yourself cognizant of the fact that you now know what hasn’t worked. Whether it’s real estate, whether it’s notes, whether it’s just digging ditches for profit, do something besides 401s and IRAs. Now, remember, the Solo 401 is different. We’ll talk about that at another time. I hope this has helped you. This is Jeff Brown, the BawldGuy. I’ll see you next time.