As I pointed out yesterday, retirement’s end game is safe, reliable income — the more the better. I’m reminded of what the original Rockefeller, founder of Standard Oil once said. When asked how much money is enough for the average man, he replied, “Just a little bit more.” The man knew human nature, didn’t he? That’s always been on my A-List of favorite quotes.
For generations real estate has been delivering the goods when it comes to long term capital growth or cash flow, whatever was the investor’s preference. Retirement income via income properties is often sheltered from taxes, if Purposefully Planned. Can’t count the times I’ve been asked to review portfolios just prior to retirement, only to discover I had to tell the poor folks there was some good news and some not so good news.
The good news was their income was gonna be stellar. No problem there. The less than great news was that they had about $1.98 a year in tax shelter. In essence, their strategy, or more correctly put, their lack of strategy had given them a much higher than average income with literally nothing to stem the tax man from taking a huge chunk of it every year. It didn’t hafta be that way.
But that’s a different post altogether.
Back to another income stream — tax free at that. It’s all about recovering — recouping losses — regaining the velocity towards solid retirement income.
To review, 401′s and IRA’s have been hammered, with most folks losing 25-40% of their capital. The question — how to recover not only the lost capital, but how to adjust your strategy to hit retirement with as much tax sheltered, tax free income as possible. Tonight we’ll talk about tax free income.
I’m no supporter of so-called Qualified Plans, regardless of how they’re presented. Either it’s your money and you can do as you wish with it, or it’s not. The EIUL — Equity Indexed Universal Life — has so many advantages over Qualified Plans it’s embarrassing. Here’s a short list:
You have control — not the government. All income at retirement is tax free — not deferred — not sheltered — tax free. When you die your heirs get the entire gross due — Yep, tax free — Period. Need money before retirement? Take it. No taxes. No penalties. It’s your money. It’s not part of your estate. It’s its own tax planning. Nothin’ but tax free all the way. Even in times like these, your annual return will be positive — not negative.
To get the lowdown from a real world expert on EIUL’s you should read this, then contact the author. Though I always say this, it bears repeating:
I don’t make dime number one when you decide to include an EIUL in your Purposeful Plan. Not directly, not indirectly, not now, not ever. It’s simply the right thing to do, so I do it when appropriate.
Now, fast forward to your retirement. Your real estate investments are already spinning off more than enough monthly income, and much if not all of it is tax sheltered. As a bonus you also have an EIUL warmin’ up in the bullpen. You don’t need the income right away, so you let it continue to grow. 5-10 years later you decide to pull the trigger. Now you have an additional $2-20,000 a month comin’ in like clockwork, and it’s all tax free ’till ya die. And, unlike your current 401k, it won’t be cut in half by Uncle Sam’s henchmen before your wake is even over.
Now that’s what I call turnin’ lemons into lemonade.
I’d love to talk retirement with you. Under 30? Over 60? Doesn’t matter. What does matter is having a Plan. It’s what I do, and I enjoy doing it way too much. All is not lost, but you need to act quickly. Time isn’t your friend. Have a good one.
Related posts:
- Road To Recovery — How To Begin Making Up Lost Ground
- Understanding The End Game — Retirement Is ALL About Safe, Reliable Income
- Over 50 And Going Down The Wrong Road To Retirement? There’s Time — Smile
- You Can’t Go Back In Time, So You Better Get It Right Today — Retirement Income
- Myth: Your Marginal Income Tax Rate Will Fall In Retirement
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