Public Safety Retirement Tips (part 2)

This is part 2 of my video series short dedicated to the men and women in public safety with tips and advice for cops, firefighters, and paramedics to retire wealthy.

In the first video we covered how to get your budget in-line, get out of high-interest debt, and begin your retirement accounts, so if you haven’t already watched that video, please pause this one and watch video 1. 

Ok, finished video 1?  Ok, great, onto today’s content.

But first, please make sure you like, subscribe, and comment on my video.  Doing so helps with the YouTube algorithm, thanks.

To start I took the average national pay for law enforcement (patrol), EMT/Paramedics in the EMS setting, and Firefighters from the US Bureau of Labor and Statistics.  Of course, pay varies throughout the nation, this was the just national average, so slight adjustments will need to be made in your own personal calculations.

Nationally Emergency Room RNs make $73,000, LEO makes an average of $65,400, firefighters make $50,850, and sadly for my EMS friends you guys get the least at $39,400.  I think the EMS numbers are skewed as they average both EMT and Paramedic salaries, but that was the best stats they had.

For this video, I averaged all three of these industries together to get $57,237.50 and that is the number I am working within this video.  I am sure you are wondering why I didn’t include RNs, etc.?  Well, I love my nurses, but you guys make far more money and it messed with my averages. 

Then I took the average American household expenses of $5,102.  Don’t worry, this video will NOT be a ton of math, so even my firefighter friends can keep up.

So, let’s summarize, the average front-line public safety worker makes $57,237.50 a year, which is about $4,769 per month, yet the average American household spend $5,102.  Umm, Houston we have a problem.

Of course, the household expenses in many cases include a spouse also contributing to the monthly income.

For the rest of my calculations, I will presume you either have a spouse generating additional income, find ways to live below the average household cost of just over $5k per month, or you have a side hustle making extra money and you now have $500 per month to invest into your retirement.

With your $500 per month, what could, or should you do?  First off, if your employer offers a 401k or similar retirement account with matching funds, I would suggest maxing out whatever their matching offer is.

The employer’s contribution is a certain percentage of the employee’s contribution. A generous employer will match the entire employee amount, making a dollar-for-dollar, or 100%, contribution.

Other companies contribute 50% or less of what the employee pays in.

Let’s use a worker with a salary of $50,000 as an example. If she contributes 6% of her salary into the company 401(k), she will have $3,000 in the plan after the first year. If her employer does a 100% match, she will have $6,000 in the plan. If her employer does a 50% match (or 3% of the employee’s salary), she will have $4,500 in the plan.

Most employers have a max percentage they will contribute to, usually around 5%.  Find out from your HR department what the options are, whatever it is, max out the amount you get from your employer for free, but do not go over.

Sadly, many 401ks have seriously high annual fees and are poorly managed.  Yes, there are some great ones out there, but since they are selected by your employer, usually the employer opts for one that is cheapest for them to implement, which may leave you with a less than optimally performing plan.

Now that you have maxed out the 401k let’s focus on my favorite investment strategy ROTH IRAs.  I have already covered Roth IRAs extensively in a few of my other videos including “Is Meet Kevin Wrong? React: “3 Reasons I Won’t Use the Roth IRA.”  You should check out that video to get a better idea of a ROTH IRA.

In Summary, it is an investment account that allows you to invest money from your paycheck today, and when you retire all of your profits are tax-free.

Using Webull let’s open a ROTH IRA and set up automatic deposits to your account each month of $500.  First Webull is going to be awesome and give you two free stocks just for depositing $100, with one of those stocks being worth up to $1,400.

As long as you continue with your automatic deposits, after 40 years, yes, I know this sounds like a long time, but if you are in your 20s this is typically the earliest you can take from your IRA without early withdrawal penalties.  Anyways, after 40 years you will be invested $240k, but you actually have just over $1.5 million dollars in your IRA all tax-free!

The IRS does cap you at $6000 per year, which comes out to $500 per month you can put in your IRA without penalty.  Keep this in mind but pause on this thought for a moment.

If you can squeeze an extra $100 each month into your investment per month.  After the same 40 years, you will have deposited an extra 88k into your investments, but that 88k brought your retirement account up $300k to $1.8 million.

If you can somehow fight to get $1,000 per month into your investments, once again, after 40 years, your retirement account would now be worth over $3.1 million dollars.

500 – $1,565,201.37 ($240,000)

600 – $1,878,241.65 ($288,000)

1000 – $3,130,402.75 ($480,000)

Ok, remember how I said you have a maximum of $6000 per year in ROTH IRA.  This is true, so you are currently capped at your $500 per month, but that doesn’t mean you cannot put another $100 or more into a standard brokerage account, all part of the Webull platform you already opened.

Of course, this second part of your investment is taxable, and you do not get the tax-free benefits for this part of the money.

Now that you have your money deposited into your ROTH IRA and your traditional brokerage account, of course, you need to invest in something that will actually make you money.  Just putting cash into the accounts will not generate you any income by itself.

I recommend you invest in funds that track the S&P.  In general, I split my investments this way:

60% to Vanguard Total Stock Market Index Fund (VTSAX)

20% to Vanguard Total International Stock Index (VTIAX)

10% to Vanguard Total Bond Market Index Fund (VBTLX)

Fidelity and iShares also have similar funds that track the same basic investments.

This leaves me with 10% to buy individual stocks that I enjoy.  This also limits any “Stupid” mistakes that I make to only 10% of my portfolio.  For example, my investment in Boeing at $330 a share, which is now trading a $131 a share, I lost about $3,000 there in that one stock alone.  Oops.

A bonus tip, place stocks of funds that pay dividends into your ROTH IRA brokerage account instead of your regular taxable brokerage account.  As dividends are taxes at a higher rate, so putting those earnings into a tax-free account will save you the most.

Public Safety Retirement Tips (part 1)

Today’s video is dedicated to the men and women in public on the front line every day. 

Now, while this video is geared towards these cops, firefighters, paramedics, and nurses, the information here is sound advice for all, and everyone from any line of work can benefit from it.

It doesn’t matter what sector of public safety you choose, going through paramedic school, or fire academy, or police academy, just graduating and getting a job is your number one goal.  I totally get it, during paramedic school, I couldn’t wait for class to be finally over and have the National Registry ‘glitter patch’ on my shoulder.  No one in the class was thinking about their retirement years, only graduation but this is a mistake and one that will follow you for the rest of your life.  But do not fret, if you follow my advice in this video when you retire, you will be a millionaire.

You are going to work an ambulance, fire truck, or patrol car for the better part of the next 25-years before you can retire with a pension.  This is hard work and at the end of it – we all hope there is a comfortable retirement ahead.

Over the years you watch your buddies retire, some live great lives on the golf course, or fishing at the lake, or whatever it is that they love to do. 

Others are forced to sell their homes, not out of a desire to downsize to a smaller home, no this is because they cannot afford the same lifestyle during retirement.  Sadly no one ever taught them how to build financial freedom.

So what can cops, firefighters, and paramedics do to almost guarantee a comfortable retirement?  Follow these simple steps.

But before we get to that, please make sure you like this video, subscribe to my channel and comment down below.  Doing so really helps with the YouTube algorithm. Thanks.

This video is sponsored by Police.Link – a mobile app that provides driver’s license scanning, VIN barcode decoding, GPS positioning, property location checks, and more to law enforcement agencies nationwide.  Check it out at www.Police.Link – a link is in the description below.

As you know I am a volunteer paramedic, a tech entrepreneur, and a real estate investor. What I haven’t already told you is how I grew up in a law enforcement family, my grandfather, dad, and step-dad all retired after long careers as cops and my stepbrother is nearing his 20th year as a police officer.  I have been in Fire/EMS for over 20 years.  So, yea, basically, public safety is in my blood.

Ok, now let’s get to it.  I will list these out as steps to go in-order, but actually many of them you can do concurrently.  Stay to the end of this video for a few tips to accurate this process.

Step #1: Budget

The first step is to create a budget, yes, yes, I know nobody wants to make a budget, but making a budget does not need to be difficult.  Gone are the days of having to memorize Excel spreadsheet formulas, no, now there are great free and inexpensive budgeting tools.  A simple one to use is Mint by Intuit, you know the guys that make TurboTax and QuickBooks, yes, those guys.

A budget puts you in control and tells your money where to go, instead of you wondering where it all went at the end of the month.  It is proactive instead of reactive. Budgeting is a process and by mastering this process you unlock the door to your financial future

Don’t worry, you’re not going to get your budget right the first time.  Just relax.  If you notice you did not budget enough in a specific category, say maybe groceries for example.  Then next month increase it a little.  But you must remember your paycheck is finite, so what you give to one category you must take from another category.

It doesn’t matter how much you make, whether you are pulling in extra overtime, or have a side-hustle where you make extra money.  You still need to budget.

So you’ve got your budget, right?  Ok, cool, onto the next step.

Step #2: Get out of debt

Now that you have your budget, you know where your money goes in and goes out each month.  You need to allocate as much of your income as possible to pay off high-interest credit cards and vehicle payments.

Now is NOT the time to be investing large sums in the stock market.  Think about it.  On average the S&P returns between 7-10% per year annually if you invest for at least 10 years.  But your credit card interest is probably like 15-30% per year.  Just paying off your credit cards now, you instantly make an extra 8-20% because you did not waste it on interest payments.  This is by far the biggest obstacle to overcome for most people, but it really is not difficult.  It just takes time and dedication.

There are many strategies to getting out of debt.  One is called the snowball – in summary, you take the credit card you owe the least on and put as much money towards it each month.  The goal is to get it paid off, while at the same time all of your other cards just pay the minimum monthly payment.  Once that first card is paid off, take the amount you were paying on it, and add that to the next lowest card.  Rinse and repeat.

Another strategy is to work on paying off the cards with the highest interest rate first.  EX: If your Capital One card has 19% interest, but your Amazon store card has 26%, focus on the 26% card first.

Either strategy can work, choose one that works for you.  The first has the emotional benefit of seeing more cards go to a $0 balance quicker.

Step #3: Emergency Fund

It is imperative that you set aside in a savings account a minimum of 3-6 months cash reserve to cover all of your expenses.  Yes, I know, this is easier said than done, so start off with a savings of $1,000.  Then work your way towards one full month’s of your expenses, then two-months, three-months, etc.  With the goal of getting 6 full months of all of your expenses saved up.

This way if something unexpected happens, like losing your job, or getting hurt off-the-clock, etc., you can pay your bills without going past due until you get back on your feet.

Step #4: Build your credit

Many underestimate the power of having good credit.  Having a good score makes the difference in getting good interest rate on your house mortgage, your car loan, it also impacts your insurance rates and in some cases also your career options.

Now that you have completed step #2, getting out of debt.  Use your credit cards wisely.  Keeping less than 10% of your total available balance used at any time.  For example, if you have one credit card with a $10,000 limit, then you should not charge more than $1,000 on it.

I know, you are saying, “what?  Only $1,000?”  – yup, do not charge more than $1,000 on it, and in fact, you also need to pay it down to zero each month as to not waste money on interest.  Remember, we are trying to build wealth for you, not the bank.

As you expand your credit you can take advantage of those zero-interest programs, you know the one that gives you 12-month, 18-month, 24-month, you get the point.  But you still need to keep your total utilization to less than 10%.

This step really requires a full video, I will work on one to cover all the details of building a solid credit score.

Step #5: Start your retirement accounts

As I covered in my video “Starting at age 16 – How to become a millionaire with only $16 a day in the stock market.” And in my other video “Response to Meet Kevin: 3 Reason I Won’t Use the Roth IRA’ it is vitally important for you to get your retirement accounts set up as early in your life as possible and to set up automatic investments.

A great option for getting started is to use Webull stock trading app, as they give you two free stocks to start out, with one of them being valued up to $1,400 when you open your account and deposit $100.  I love their app because they also allow you to buy and sell after-hours, so when a great deal on a stock is available you can snap it up with Webull before anyone else.

Also, If your employer has a 401k or SIMPLE IRA with matching, you would be a fool to not take advantage of this.  You should max this out without question because the money they contribute is free money.  In fact, in this case, you should start this even if you are still in debt as the free money your employer is giving is just too good to pass up.

Bonus Optional Step: Start a side-hustle

Like I said earlier in the video, your paycheck is finite.  Of course, you can pick up some overtime, get promoted, or get hired at a different department for better pay, but you are still limited to the pay per hour.

Create a side hustle that generates extra cash.  This could be anything from producing YouTube videos, writing a book, selling real estate, teaching/coaching, etc.  Honestly, this is limitless.  Pick a subject you enjoy, learn as much as you can about it, then find a creative way to make some extra cash each month.

For me, my book America Hijacked brings in $500-1,000 a month in revenue.  Some months are better than others, some pretty much suck.  But it is continuous money each month, auto deposited from Amazon.

While I’m on that subject, if you enjoy politics, or at least enjoy learning how both parties have lied, cheated, and stole from the American people, you should grab a copy of my book.  A link is in the description below. 

Should I make a whole video dedicated to how to create a side-hustle and generate an extra $500 a month cash?  If so, comment down below and tell me what ideas you would like me to cover.

Bonus Tip: How to accelerate this process

While I listed the five items as a ‘step-by-step’ to be done in order, you actually can do most of them at the same time.  Creating your budget with a service like Mint only take you 20 or 30 minutes to get started.  Then open a savings account with an automatic deposit of $50 or whatever you can afford per paycheck into it.  This is to build up your $1,000 first milestone.  Open your Webull stock trading account and deposit $100 in it today, as they are going to give you two free stocks with one stock valued up to $1,400.  That is just free money waiting for you.

While you are building your emergency fund, max out on all retirement accounts that have matching from your employer. 

Now you are ready to start coasting.  Knocking down your debt and building your credit concurrently.

Depending on your debt-level within a year or two, you should be debt-free from your credit cards.  Now is the time to go full force into your retirement investments.

Thank you very much for watching, I hope you enjoyed this video.  Please make sure you like, subscribe, and comment on this video.  Doing so really helps with the YouTube algorithm.

Is Meet Kevin Wrong? React: “3 Reasons I Won’t Use the Roth IRA”

I want to respond to some of the statements Meet Kevin made in his video ‘3 Reason I Won’t Use the Roth IRA’.  First off, I want to make it clear I am a big fan of Kevin, and I usually have mad love for his content.  That being said, I cannot let my appreciation for him cloud my judgment.  There is something about this video that just rubbed me wrong, and I need to set the record straight. 

I’m sure I will piss off some fanboys, thinking I am just hating on him, but making money requires attention to detail, and no sugar-coating will change the facts. 

Of course, we are all just dudes on the internet sharing our opinion, and with that in mind no one is right or wrong . . . . well, except for me, because I am always right.

This is so true about schools not teaching students about finances.  Heck, I remember back in elementary school, going to “Enterprise Village,” a program designed to teach students to be good little consumers.  Without going into a long-winded story, I will summarize it quickly, and then we can get back to Kevin. 

The concept is each student is given a job with one of a dozen or so businesses; for me, I worked as a bank teller at Barnett Bank.  Each student is given a paycheck & checkbook (I guess now debit-cards).  Throughout the day, you leave your job and interact with other students working at other businesses and purchase products or services.  Any items you purchase with your virtual money, you get to take home and keep.  In my case, none of the items for sale were of any use to me, so I decided to save my money.

The stupid thing was, this was against the rules.  All students must spend their money by the end of the day; for this reason, I was given a low grade for the assignment for not spending my money in the economy.  

This is hardly a good way to teach students to be financially responsible, it only teaches you to spend all your money, and when you run out of money, charge it on a credit card instead of saving and investing your money.

Ok, enough of me complaining, now back to Kevin.

[after main vid]

Ok, here is where I have an issue with Kevin.  He is presuming the status-quo will continue, and I think it is more reasonable to conclude the opposite is more likely, and here is why.

Historically, the Top Federal Tax Rates have been on a decline since their highs in the 1960s, with a few blips up and down, they have averaged about the same now for 30 years. 

After the great depression, we saw an almost 40% uptick in the Top Federal Tax Rates from 24% in 1929 to 63% during the Great Depression, and this steadily increased, reaching 94% in 1944.

In 2020, due to the [illness that will remain nameless, so YouTube algorithm doesn’t screw with my video], we see historically high unemployment and the most substantial financial impact on small, medium, and large businesses since the great depression. 

As we all know, this has spurred the US Congress, the US Department of the Treasury, and the Trump Administration to pass unprecedented stimulus and financial rescue packages to help the people and businesses weather this storm.  Overall, I agree with this and feel it was necessary; however, the downside is an ever-expanding national debt.

The debt, in and of itself, is not the primary concern I have here.  The more significant concern I see is the growing sentiment for the Democratic Socialist platform, encouraging both political parties to pass ever-increasing spending bills.  I am not here to argue the nuances of the pros and cons; this video is strictly about facts and finances.  Once you turn on the faucet of free, easy money, it is tough to turn it off. 

This is not a right vs. left issue, in-fact if you want to read about how both political parties have lied, cheated, and stole from the people, check out my book America Hijacked.

Ok, now, back to my reason for disagreement with Kevin.

With all of this in mind, I feel there is a strong likelihood over the coming decade or two; Congress will be forced to raise taxes to cover the costs of ever-expanding social programs.

With Kevin’s idea of 1031 Exchanges for real estate, yes, currently, this works excellent for legal tax mitigation.  However, there is no guarantee this will remain the same for decades to come.

I can very quickly see a political talking point from someone like Representative Omar (D-Minnesota) claiming that “evil landlords are getting rich off the backs of the people,” and the “1031-loophole” needs to be removed.

In the short term I see a lowering of payroll taxes coming out in President Trump’s second term, yes, I am pretty sure he will be reelected. 

However, in the long term, 15-20 or more years, we can reasonably deduce that payroll and income taxes will either stay the same as they are today or get higher, not lower and you quickly lose the benefits Kevin outlines.

Congress can easily change the rules by saying, “after today new real estate purchased cannot use a 1031 exchange, or new IRA accounts cannot be tax-free, or new investments in Opportunity Zones no longer qualify”.

Yes, those would all suck, but from a legal perspective, and of course, remember, I’m just a dude on the internet, not a lawyer.

Whereas, with a ROTH IRA, it would be almost impossible for a law to get passed that, retroactively changes tax law to force you now to pay taxes on the money in your ROTH IRA. 

It would be easier to say no NEW transactions can take place tax-free.  

But it would be nearly impossible for Congress to go back and say “hey, senior citizens, remember the money you put in that Roth IRA that we told you for the past 40 years was tax-free, well j/k . . . now pay up”.

Such a deal would be contested legally in the courts and, just as importantly, would be political suicide for any party.

So, with all of this in mind, what am I doing to protect my finances?  Honestly, I am doing everything.  I am buying real estate, holding and renting these properties, investing in the stock market, and investing in tech startups.

While my general goal is not necessarily to sell any of my properties, a 1031 Exchange is the perfect option should I choose to divest some of my portfolio and transition to different properties.

I also max out my Roth IRA Contribution each year; this is currently set at $6,000 if you are under 50 years old.  I have a SIMPLE IRA with one of the businesses I own, and I participate in an HSA.  Then lastly, I have a few normal taxable brokerage accounts as well. 

I have a mixture of tax-free, tax-advantage, and normal tax investments.

This way, no matter how the laws change, I can take advantage of them.  If a bill comes out giving you a tax break on tax-advantaged accounts I can use it.  If there is a different law for normal tax investments, I can use that one as well.

No options are perfect, but spreading the risk across multiple tax strategies, I feel, is the best.

Thank you very much for watching, please make sure you like, subscribe, and comment on this video as it helps with the YouTube algorithm.  Also, please check out my book America Hijacked and last, checkout Webull with the link in the description below to use what you have learned about investments to open a brokerage account today.  If you deposit $100 into the account, Webull will give you two free stocks, with one of them valued up to $1,400.

Lastly, make sure you check out Meet Kevin if you haven’t already.  His channel is linked in the description.  Also, checkout his online video courses, from what I have heard they are pretty decent. I hope to make a fully review of his course work in a coming video.

Thanks again, and I’ll see you on the next one.