How much of your 401k is yours? The typical answer is” all of it,” but don’t forget that you owe the IRS taxes on every penny you put in plus taxes on the growth. So conservatively, that’s at least 14% of your total amount and could be much higher depending on your tax rate and how high taxes are when you retire.
Do you think taxes are going to go down? If they do go down, you could come out ahead. But think about your retirement lasting 30 years; does it make sense to believe there won’t be a tax increase at some point?! We don’t know, but most people assume that taxes will go up. We have a growing national debt that is currently over 29 TRILLION dollars! Take a look at the US Debt Clock; it’s terrifying!
Our government historically spends more than it takes in, and we, the people, are responsible for this debt, and it is collected in the taxes we pay. The aging population and slower labor force growth affects our economy and taxes in many ways – more pressure on the working population to support seniors and increased cost for Social Security, Medicare, and Medicaid. When there are more people in retirement than in the workforce, there are fewer taxable incomes to support government spending. Today, more than 46 million adults in the US are age 65 or older. It’s predicted that by 2050, that number will double! So, I will ask you again, do you think taxes will go down or go up? You know what we think!
We are not saying that you shouldn’t participate in the 401k plan that your employer offers. If your employer offers matching funds, you want to take advantage of free money. But know, if the plan match is 50% up to $5,000, that means $2,500. There is also something to be said for the disciplined, forced savings that payroll deducted 401k plans provide. It is also essential to know (because many people do not) that you are most likely paying administrative fees, typically a % of your invested assets. Also, if you fund beyond the match and do not take advantage of plan provisions that may allow you to move money out of your plan without penalty after age 59 1/2, you may unknowingly be paying way more in taxes than necessary. We would argue that if you pay taxes on a portion of that money upfront, you could be thousands of dollars ahead in the long run.
Some other fun facts – did you know that income from your 401k or IRA:
- Can dramatically increase the premiums you pay for Medicare
- Increases the taxes you pay on your social security benefit by as much as 85%
So, where can you accumulate cash and legally pay less in taxes, build wealth, and avoid losing any of your hard-earned nest egg?
Learn about how the Infinite Banking Concept provides:
- tax-free income
- access to your principle and your gains at any time for any reason (tax-free!)
- guaranteed, compounding cash growth every single year
- a guaranteed death benefit that is not taxed like a 401k
Infinite Banking uses the unique traits, benefits, and guarantees of a properly designed whole life policy to build wealth while maintaining the liquidity, use, and control of your money. Whole life is an asset that is not tied to the stock market, creates stability in our unstable world, and may earn a dividend (not guaranteed, but most top mutual insurance companies have paid a dividend for over 100 years, including during the Great Depression, the 2018 Flu Pandemic and the past two years as the world has faced the COVID crisis)
Think you can’t afford an IBC policy? The good news is that we often help find “additional” money to redirect to your policy – you don’t have to work any harder or spend any more money to start your plan today.
Do you want to protect yourself from paying higher taxes and be able to grow your nest egg without the risk of losing any money regardless of what the stock market does?
This is what we do every day – help individuals, businesses, and couples decide if the IBC concepts make sense for them. Give us a call; we are here to help!
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