Double your monthly retirement income with these self-directed IRA strategies – episode 43

We’re here with Edwin Kelly covering some great ways to leave a legacy for yourself and your family

Double your monthly retirement incomeWe’re going to go over a plan to pay ourselves and not the government — never pay taxes. We’re going to learn how to double your monthly retirement income.

The problems with retirement savings today

There’s a social security study on IRAs. So after 40 years, only 5 out of 100 people were economically secure in retirement. A lot of people are using outdated vehicles. What are the challenges that led to this problem? Part of the problem is taxes. If you make $100,000 this year, you could pay over $42,000 in taxes.

The other problem is investments. Some people choose safety where the principle is safe, but it doesn’t grow quickly. This is the other thing that people do. They put their money in the stock market in what’s called a mutual fund. Sometimes it goes up and sometimes it goes down, but it’s never steady. There’s no predictability.

The last problem is that people don’t know how much they’re paying. There’s an organization called the Investment Company Institute. The average fee is 5.3%. Think about how much the stock market has to go up just for you to get back to $0.

For most people, “Welcome to Walmart” is their new retirement plan. There is an alternative.

Not just an IRA, a self-directed IRA

We’re going to be talking about self-directed retirement accounts. Think of it like a Ferrari. What is the fuel you put into it? Investments. We’re going to choose investments that are consistent and reliable.

This self-directed IRA is an IRS approved vehicle that allows us to run our own investments and spend it tax free. If you could save $5,000 a year for 30 years and get 10% interest, what will that grow to? Over $991,000. What is important is that it’s predictable, secure income.

“You can’t buy real estate with your IRA! Can you?!”

A lot of people think that you just can’t do real estate inside an IRA. You’ll hear that from people like attorneys, CPAs, tax advisers, family members, or financial planners, but who makes the rules about IRAs? The IRS, well at least they enforce them. If you go to the IRS website, it tells you that plan trustees can prohibit real estate. It’s not a government prohibition.

Buy outright, leverage, or partner with IRA investments

You can do an outright purchase, leverage, or by partnering. Imagine that someone has less than $100,000. If you use money from your retirement account, all the costs must return to the IRA and all profits must be returned to the IRA. It’s taxed protected.

Imagine a couple. They could partner together and buy a property they couldn’t otherwise afford. All expenses are split in the percentage of ownership as are all profits.

There’s about $20 trillion in retirement accounts that people aren’t sure about what they should do with it. There’s a lot of ways to go about this. Each is different for the individual goals of the people involved.

A lot of people think they have self-directed IRAs. The problem is that your financial institution will say it’s “self-directed” in that you can buy any of their investments with it. If you want to buy property, rent it out and have the profits go back to the IRA, they won’t let you. A true self-directed IRA will.

Believe it or not, you can borrow money from within your IRA and pay it back from profits from within your IRA. If you have time, you can do that to buy properties that will be owned free and clear by the time you retire.

Double your the amount that you’d have with social security alone

Here’s a simple strategy to double your monthly retirement income. The average social security benefit in 2014 is around $1,300. With the traditional investments, you might get $300-400 more. Instead, if you buy two properties that pull in $700 a month each, that’s double what social security pays.

The question isn’t how much you have in the bank, but how much will come into your hands every month. If it’s a ROTH IRA, it’s all tax free, so that’s like 30-40% more spending power. A lot of people don’t understand the rules 100%. One wrong move and you could really be in trouble. They run into this risk because a lot of companies that do self-directed IRAs don’t give any guidance. That’s the big risk. You don’t know what you’re doing and your IRA trustee won’t tell you.

Show outline:

  • We’re going to go over a plan to pay ourselves and not the government — never pay taxes. We’re going to learn how to double your monthly retirement income.
  • The three problems with retirement savings today: taxes, investments, and fees.
  • We’re going to be talking about self-directed retirement accounts.
  • A lot of people think that you just can’t do real estate inside an IRA. It’s not a government prohibition.
  • Buy outright, leverage, or partner with IRA investments
  • There’s about $20 trillion in retirement accounts that people aren’t sure about what they should do with it. There’s a lot of ways to go about this.
  • A lot of people think they have self-directed IRAs. The problem is that your financial institution will say it’s “self-directed” in that you can buy any of their investments with it. If you want to buy property, rent it out and have the profits go back to the IRA, they won’t let you.
  • Here’s a simple strategy to double your monthly retirement income. Buy two properties that pull in $700 a month each, that’s double what social security pays.
  • The question isn’t how much you have in the bank, but how much will come into your hands every month.
  • A lot of people don’t understand the rules 100%. One wrong move and you could really be in trouble.

 

LINKS MENTIONED IN THIS EPISODE:

http://www.irs.gov/Retirement-Plans/Retirement-Plan-Investments-FAQs

 

HERE’S THE WEBINAR VIDEO IN ITS ENTIRETY

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