Case Study: Enjoy a Guaranteed Lifetime Income and Reduce Your Taxes in Retirement

Tom Justice is a 59-year-old chemical engineer who has three major concerns about his retirement plan…

His first concern is about outliving his retirement savings

He’s read the statistics and knows that in spite of experiencing the longest bull market in history, the average 65-year-old will outlive their savings by almost a decade, according to the World Economic Forum.

Tom doesn’t have anywhere near the amount of savings recommended by many experts. According to the “Rule of 25,” you should have 25 times your total annual expenses saved by the time you retire if you don’t want to run out money.

Tom wants to live on at least $100,000 a year, which means he needs at least $2.5 million saved up. And that’s a far cry from the $750,000 he’s managed to save in his 401(k)… and it’s all invested in a stock market that he knows is past due for a major market crash.

Tom’s second concern is he believes tax rates can only go up over the long term

[Read more…] “Case Study: Enjoy a Guaranteed Lifetime Income and Reduce Your Taxes in Retirement”

How to Pay Zero Taxes in Retirement – Without Being Broke

Do you have money in a tax-deferred retirement account such as a 401(k), IRA or 403(b)? If so, you’re sitting on a tax time bomb.

I’m going to reveal the tax traps you face and show you how to move toward a 0% tax bracket in retirement (legally!) – but not by doing it the way most people do it, which is by being broke!

Conventional wisdom says, “Maximize your contributions to tax-deferred plans. Your money compounds without being reduced by taxes, and you’ll end up with more money during retirement.”

But like much conventional wisdom about personal finance, it’s not true…

The Society of Actuaries says if the tax rates are the same,

It doesn’t make any difference whether [the taxes] are taken away from you at the beginning (tax-exempt) or at the end (tax-deferred). It’s the same fraction of your money that is left to you.”

But most people look at their savings and think it’s all theirs. You may have forgotten you’ll owe Uncle Sam the taxes he let you defer all those years – on every penny you’ve put in and every penny of growth.

And according to Boston College’s Center for Retirement director, Alicia Munnell,

It’s a very big deal when people realize they only have two-thirds or three-quarters of what they thought they had.”

If the tax rates are actually lower during your retirement, you might come out ahead by deferring your taxes. But where do you think tax rates are headed long term? You must consider what tax rates might be during a retirement that could last 30+ years.

Most people we talk to think taxes ultimately must go up due to the aging demographics of our country and our unsustainable national debt. (Recently the debt passed $21 trillion for the first time.) If tax rates do go up, and you’re successful in growing your nest-egg, you’ll simply end up paying higher taxes on a bigger number. [Read more…] “How to Pay Zero Taxes in Retirement – Without Being Broke”

The Ticking Tax Time-Bomb of Conventional Retirement Plans

One of the biggest selling points of 401(k) and IRA retirement plans is that the money you put into them isn’t taxed right away. Bring out the bubbly to celebrate, right?!

Not so fast.

First of all, some people – hopefully not you! – mistakenly believe money placed into these retirement plans is “tax free.” It isn’t. It is “tax deferred,” meaning that you will pay tax on that money when you withdraw from your retirement plan down the line.

Deferred taxes might sound good, but deferring your taxes is like putting off a visit to the dentist. The problem compounds and will only get worse.

Deferring taxes creates a dangerous potential tax time bomb because you don’t have the answers to two critical questions…

First, what will the tax rates be when you retire? And what will they be 20 or 30 years later?

[Read more…] “The Ticking Tax Time-Bomb of Conventional Retirement Plans”