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The Last Chance Millionaire

The Last Chance Millionaire

I recently received a review copy of The Last Chance Millionaire by Douglas R. Andrew, which has a publication date of June 12, 2007 in hardcover. I’ll be passing along my review copy to a random commenter. If you’d like a chance at receiving the copy, just leave a comment on this post by June 22nd, 2007. (U.S. participants only.) I’ll attempt to contact the winner on June 23, 2007, and will need to hear back from them no later than June 29th, 2007 or I will choose a new random commenter to win. Keep in mind that the review copy is paperback, and is NOT the final version of the book. Winner must agree not to sell the book on ebay. Chances of winning depend on the number of entries. Now on to the review…

The book is geared explicitly toward American Baby Boomers: those people who were born between the years 1946 and 1964. The premise is that even though you may feel unprepared for retirement, there is still time to catch up and even surge ahead past goals you hadn’t previously dreamed of reaching. Now, I am not the target audience (being not quite 40) but I was glad to see that particular message, because it seems that sometimes people who don’t yet have adequate retirement savings simply don’t bother trying. They figure that there is no way they could reach their goal anyway so they may as well live it up now & not worry about the future. That said, I was a bit shocked at the rest of the book, which offers views that are contrary in most every way to more commonly given advice.

A large part of the advice revolved around always carrying a mortgage — ideally as large a mortgage as possible with as small a payment as possible, and refinancing every few years to take out even more equity. The idea is to take out as much equity as possible from your home (and possibly from a vacation home, RV or boat as well) and invest it in a non-qualified retirement plan that earns compound interest at a rate equal to or in excess of the rate you are paying simple interest on your mortgage, and to offset taxes that you would pay on retirement money you withdraw by deducting the mortgage interest. It’s arbitrage & offsetting taxes in one.

For the most part, The Last Chance Millionaire advocates avoiding traditional retirement vehicles such as 401(k) plans and IRAs, and possibly even getting out of existing qualified retirement plans early (despite the penalties) if you have a good deal of time before retirement. The idea is that you will then pay taxes on them now when you are likely to be in a lower tax bracket instead of later when your income is likely to be higher. Like most books, each of the scenarios described makes certain assumptions, but the main idea is to allow your retirement funds to grow tax free (not just tax deferred) in a safe investment vehicle.

View Comments (10)
  • With you above stated goal . . . . and paying off our mortgage (which is my only debt), it is apparent that you haven’t read the book you received, The Last Chance Millionaire. You will realize that paying down your mortgage is not in your best interest.

  • No, actually, I did read the book. I just disagree with it and believe that paying down my mortgage IS in my best interest. I will admit that it gave me pause. However, we get zero tax deduction from our mortgage and I prefer to have a guaranteed rate of return and peace of mind over the chance of making more via other methods. Which, historically I’ve been rather bad at. I’ve been lucky not to LOSE steadily on other investments, let alone make more than than I’m paying on our mortgage on them.

  • Anyone “thinking” of using this method should be forwarned. Its not all that it appears. The author has used the same argument in all three of his books. Dump everything you have and buy a euity indexed life insurance policy. I have seen several of his or his followers proposals and non have ever contained a direct comparison of what a client may have currently to their recommendations. WHY?

    I would hope one would Google/Yahoo Missed Fourtune 101 and research the number articles that are out there on his approach. He has paid back a number of clients their full premiums rather than face a legal authority.

    His biggest item is that you can take aan euity home loan and deduct the full interest (IRC 163). NOT! Also he fails to understand IRC 264a. Borrowing money to buy life insurance and you deduct the interest on the loan. Again NOT!

  • I have googled/yahood and every article I have read attacking the approach, without fail, has misapplied the methodology. The growth created by starting out with a large amount compounding (the equity from a house) as well as the tax-free growth AND withdrawal, out-performs dripping small amounts of money into investment accounts (unless high risk return rates are assumed for the “regular” stock market comparison). The average return in 401K and qualified pensions has been about 8%. If you use this figure for comparison, apply the concept properly and run the numbers, Equity Planning will give as great or greater returns with less risk (even accounting for actual mtg. deduction rules mentioned above and in the book, taxation and insurance costs). As I said, I have not (as of yet) read a single criticism that did not misapply the methods based on the critiquers (spelling?) error and bias – Just and FYI.

  • Read Al’s remarks, but a little skeptical of financial advice from someone the can’t even spell annuity; doesn’t even come close —euity

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