A Case Study Part 3 — Video

What this episode covers

In a case study part 3 we examine the end game income at retirement. Also talk about how regular folk do this all the time. Download Audio   Transcript:   I’m going to end this series with going back to the beginning and the reason for doing this kind of exercise in case studies. I get asked all of the time, “How is it that you’re always talking about people retiring when it’s 15, 20, 30, sometimes way more than that per month and a huge portion of that tax-free by definition? We can’t do that. We’re regular folk.” I’m here to tell you, even if you’re not these two that are making 180, maybe your household income is 50, 60, 80 thousand dollars before taxes, and you’ve scraped up enough to buy one note, one duplex. You may retire later than this couple does, but I’m telling you, if you are just disciplined, and you show up every month doing what the plan calls for, you can end up with a retirement. Most people end up doing this over time where the monthly income after tax in retirement is equal and more likely, more times than not, more than they even earned at a job. It’s not just possible, it’s probable. You’ve got to just show up every month. You’ve got to do the boring things. These people are going to end up this way. They’re going to have two to four duplexes. Murphy’s spreadsheet says every duplex is going to give them 16 grand a year free and clear worst case. That’s 20 years, 30 years, of no increase in the net operating income. We both know it’s going to be more than that. Let’s say they ended up with 4 free and clear in 30 years. That’s over $5,000 a month just from their duplexes. They don’t owe any money on them. What about their EIUL? Well, maybe they started pulling that EIUL together at 62. Let’s be conservative and say, that’s give or take, about $8,000 a month. That’s tax free. Now they’re making $5,000 a month that’s taxable and $8,000 a month that’s not. We’re up to 13. We haven’t even talked about notes! They bought their first notes when they were in their early 30s. For heaven sakes, they’re 62! It’s been 30 years of rinse and repeat, rinse and repeat. Even if they only went through that portfolio three times in three decades that scenario, I’ve been investing in these things for 38 years. That’s highly unlikely, but let’s say that it happened. They are going to own two commas worth of notes in 30 years without even trying. That’s going to give them an income, give or take, of at least $8,000 dollars a month or up over $20,000 a month. These are regular folk, people. All they did was the boring things year in and year out. All of this note appreciation and real estate. Thirty years of no appreciation, no income as far as their net on their real estate. We took twice the length that most of these notes are going to pay off. Now, let’s go to their Roth notes. They’ve got 30 years of never being taxed on the payments or the note payoffs—30 years! They were able, every year on a Roth IRA, which is the worst kind to have, because they can only give $5,500 to $6,500 a year to it. They gave and gave and gave. Do you realize that if they wanted to wait until they were 62 and just have all of this income happen at once, that those notes over 30 years with their contributions, as little as they were, halfway through that 30 years the payments from all of those notes would be buying more notes? Fifteen years of those payments buying more notes and another 15 years, 30 years total, of those notes paying off and never being taxed. Let that sink in. How much is that going to be in 30 years? I have no idea. I’ll tell you what it’ll be at least,

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