59.5 and Retired — Video

Many love talkin’ about impressive dollar amounts in their 401k at retirement. Look, when you’re 59.5 and retired, your plan was likely based upon the YIELD that impressive amount was gonna generate, right? And there lies the problem. Retirement is about after tax income. The rest is HappyTalk.


Transcript:   Hi this is Jeff Brown the “BawldGuy”. Today we’re talking to those who are fifty-nine and a half or older, retired with about a half a million dollars in their 401k or IRA, and they’re making the 4% percent that Wall Street told them they would. So here’s the deal. You retired, you got up to half a million dollars. It’s a traditional 401k and you’re making that 4% all those years that you got up to a half million dollars way more than most so way to go. And you’re making 4%. Now your social security when you decide to take it is probably going to be more than the twenty grand that 4% is spitting out from your $500,000, but we’ll just leave that one liner alone. I’m not trying to make you feel worse, but that $20,000 is, oh, before tax which means on your best day it’s probably going to come out to be $15,000. How does that work for you? Thirty years of scrimping and saving and sacrificing, taking one less vacation so you can have less than $20,000 a year off your half a million. Let me give you a solution not just keep pointing out the problem. Take that $500,000, move it into a tax free envelope, a solo 401k, make it a Roth, and let’s say that you get it down to where after a small cash reserve you don’t have $500,000 to invest, you’ve only got $250,000. That $250,000 is going to buy somewhere between $370,000 and $385,000 in discounted trust deeds. You’re going to take that income, and let me tell you what that income is going to be in the market that I’m in. It’s going to be about $40,000 a year, and I did say tax free, right? So you’re going to have double the income and it’s tax free. OK. Stop doing the happy feet dance. The thing is when those notes that you first bought pay off, you’re going to have a bigger amount of money because remember you bought them for probably 65 cents on the dollar. That means you’re going to buy a bigger batch of notes, and what happens when you buy a bigger batch of notes? You’re getting the same interest rate, the same yield, but it’s on a bigger pile of investment capital. You get a raise while you’re on your cruise. So you’ve gone from $20,000 before tax to $40,000 tax free. You can thank me later, and if we ever get to meet in person, trust me you’re buying. Thanks for listening. Jeff Brown, the BawldGuy here. I’ll see you next time.

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