13Apr

Will you be paying Higher Taxes in Retirement

Try to imagine the peace of mind that comes from knowing you cannot outlive your retirement nest egg.

Now, imagine the sense of abundance that would accompany knowing your money was safe from rising taxes, market volatility, and climbing interest rates.

A 2014 Harris poll found that 74% of Americans were worried about having enough income in retirement. A survey published recently by the National Institute On Retirement Security showed that 86% of respondents agreed that the country is facing a retirement crisis.

It’s worth noting that this opinion was strongest among the highest earners.

The bottom line is that these concerns are not unfounded. Finding yourself in a lower tax bracket at retirement is now the exception and not the rule.

What many retirees are finding is that they’re paying more in taxes at retirement even though they are earning less income. Why is that?

There are 3 major reasons. They don’t have as many deductions to claim any more. They’ve paid off their home mortgage. They don’t have kids at home any longer. And, most importantly, Congress keeps raising taxes.

Think about how many people rejoice when they receive their tax refund as if it were some magical gift from Uncle Sam. They’re forgetting that they’ve essentially given Uncle Sam an interest-free loan by paying more in taxes than they actually owed.

Instead of using your money refunded by Uncle Sam to get deeper into debt, wouldn’t it make more sense to put that money to work growing in a tax-free vehicle where it remains tax-free from that day forward?

That’s not an option as long as your retirement savings remain in 401(k)s or IRAs.

Time to retire the 401(k)?

NBC Nightly News recently aired a story titled “Retirement Crisis – The Great 401(k) Experiment Has Failed for Many Americans.”

The story referenced a research economist named Anthony Webb who works for the Center for Retirement Research. Webb pointed out that 401(k)s were never designed as the nation’s primary retirement system.

He went on to explain that IRAs and 401(k)s came to be the primary retirement system as a historical accident.

For many years now, Doug Andrews has been teaching about why IRAs and 401(k)s are not the optimal retirement savings vehicles.

Back when his book “Last Chance Millionaire” became a best seller,
Doug was interviewed by members of the national media. They were surprised when he informed them that he’d never owned an IRA or 401(k) and never intended to own one.

The interviewers were curious why he would take this stance.

Doug explained that there are much better ways to save and to enjoy tax-free income in retirement since it’s no longer axiomatic that people will be in lower tax brackets upon retiring.

Not surprisingly, nine months later, Time Magazine had a headline that read, “Why It’s Time to Retire the 401(k) and Do Something Better Instead.”

Time was starting to see the light after most Americans lost nearly 40% of the value in their retirement savings when the market declined in 2008.

Many of them took the remaining 60 percent of their savings and socked it away in in the bank or a credit union earning a measly 1%. They felt as if they had lost their future.

Remember, market volatility is just one reason the IRA and 401(k) don’t make as much sense; the bigger problem is that people aren’t ending up in lower tax brackets.

Slowly, the public is beginning to wake up to the truth we’ve understood for many years; there is a better way to save for retirement. Wouldn’t you like to know more?

Call Knowles Systems at 888-518-3113 X 3 for an Insight Interview with our team of Strategists. Now is your time to make a difference in your future.  Times have changed and it is time we catch up with those changes.

Knowles Systems, Ted Leutz and Lynette Robbins are friends with Doug Andrews, author of Missed Fortune.  Doug began his career as a Financial Advisor and decided to share his insights with others in his field of expertise.  Lynette and Ted joined Doug’s training series in 2006 and implemented many of Doug’s concerns into the Knowles Systems.

Call today to learn more or contact us at 888-518-3113.



ABOUT THE AUTHOR

Doug Andrew