The Dangers of “The Government Plan”

by | Jun 1, 2022 | Blog | 0 comments

If you haven’t realized that tax will always increase, let this serve as a wake-up call to that reality. It has been quite clear least for the past 20 years that the day of reckoning is upon us, which is purely based on arithmetic and not a prediction.

A huge cash infusion will be needed to meet our government’s obligations and commitments. The only option is to raise taxes that we have worked hard, sacrificed, saved, and observed every regulation. The same government advised us to put our money in tax-deferred like 401(k)s and IRAs, and many of us played by the book.

How You Have been Losing Your Savings

The flip side of saving diligently from these accounts is that a massive chunk of the tax-deferred retirement saving is sitting ducks for a revenue-hungry uncle Sam. In fact, like your 401(k)s and IRAs savings grow, the government’s share will grow too since it’s your partner in your very own savings. Unlike traditional business partners, Uncle Sam can increase your tax-deferred savings whenever money is needed, which is coming to pass soon.

The big question is, are you prepared to let go of a huge chunk of your savings? You might be prepared, but the truth is that the answer is no for many people. It is because they believe that it can never happen to them, which can and will happen. We have federal taxes rates exceeding 90%. In fact, from 1936 to 1981, the top federal income tax rate has never gone below 70%. High taxes translate to less money during your retirement.

Are You Prepared

You might think you are prepared with a most unlikely plan, but the sanest strategy to avoid the oncoming tax disaster train is being prepared. If this has struck you wondering whether you have a plan to reduce your taxes now and in the future, it’s a clear indication you don’t have a plan. This leaves you with only one plan, the “government plan,” which is not good.

The best plan you need to mitigate all this must be done by you and as fast as possible before the tax train wreck arrives. This means that you no longer need to transfer tax-deferred funds to forever-taxed accounts by simply moving them to accounts that are never taxed. Here you are capable of building tax-free savings.

The Ultimate Strategy

The good news is that apparently, we are running on the lowest tax rates in the nearest history, which is the most appropriate time to make a move in creating a tax-free income for your retirement years and beyond. Your loved ones will also benefit from this move because you will end up saving more.

The tax code includes several moves to create a tax-free income for your retirement, which many people shy away from. For example, Roth IRA and life insurance alone can help you and your family end up with more income than you would have with the current retirement plan, and a big chunk of it is tax-free.

A thing to note is that there will never be a more cost-effective time to leverage your current assets into tax-free assets. When you move your tax-deferred funds to a tax-free territory, you can reduce the impact of future tax hikes on your retirement savings.

Work With Professionals

Financial management and decisions are not easy tasks for everyone. That is why you need an expert who can guide you by offering some of the best strategies to handle your financial situation. Make a move today and contact us for viable economic solutions.