Bass Financial Solutions, Inc.

“If everyone was right, we’d all be rich and happy!”
-Author Unknown

Isn’t the world of financial advice filled with contradicting opinions? Just turn on one of the financial news shows, and you can find two “experts” going at each other, on opposites sides of the fence, both armed with piles of charts and data to prove their point.

But there is one thing that they all agree on. Everyone agrees that when it comes to retirement planning, you should start by contributing as much as you can to your retirement plan at work, whether it is a 401(k), 403(b), a 457, a SIMPLE IRA, or similar plan. Everyone agrees that you should not only contribute as much as you can, but you should also do your best to “max-out” your contributions, thus depositing as much as the law allows for each and every year.

This type of thinking is so pervasive that I challenge you to find a single article written in Money magazine, Smart Money magazine, Forbes, or even Kiplinger’s that argues against this concept. EVERYONE agrees that these plans are the best place for you to invest your money. Now, they may all argue as to what to do with your money once you get it into these plans, but they do agree that these plans are the best home for your retirement investments.

Today’s retirees, however, are starting to learn that this advice, building your retirement nest egg in these traditional retirement plans, is one of the worst decisions they have ever made! Many of today’s retirees are coming to realize that their traditional retirement plans are not designed to benefit them, but instead are designed to benefit the IRS. In fact, many are wondering whether they ended up planning for their retirement, or for the IRS’s retirement.

How did we get here? How did we ever fall for the idea that traditional retirement plans were good homes for our money? Well, you might remember hearing something like this at a retirement plan meeting:

“Retirement plans are a great place to save for retirement. First, they offer you the opportunity to invest “pre-tax dollars”, which means that you get a tax deduction today for the dollars you invest. Second, your money grows tax-deferred, so you don’t pay tax on your money as it grows. But there is a disadvantage with these plans. You will have to pay tax when you take the money out down the road. But that’s OK because you will be in a lower tax bracket when you retire. Your home will be paid off and you won’t need as much income, so your taxes will be less. Take the tax deduction today while you are in a higher tax bracket and pay your taxes later when you are in a lower tax bracket”, he says.

You remember that line of thinking, don’t you? What’s the problem with it? The problem is that this line of thinking requires that you make several dubious assumptions. In order for this line of thinking to work out, you need to have all of the following be true:

1. Taxes have to stay at the same level they are today and NOT increase down the road (in an upcoming article, we’ll learn why this is “pie-in-the-sky” thinking).

2. Your health care expenses must not significantly increase in retirement (good luck there!).

3. Your lifestyle in retirement needs to be one in which you stay at home and do nothing (because doing something almost always costs money).

4. And most of all, your retirement plan has to earn really lousy returns over many years (because no matter what the tax code is down the road, if your retirement accounts grow, you’ll end up paying tax on a much larger sum as you pull the money out).

What are the odds that any of the four criteria above will be met, much less all of them? Heck, you probably don’t want numbers three and four to happen! I hope that you want to enjoy a comfortable retirement, where you do whatever you want to do without having to worry about money. And I sure hope that you have nice portfolio returns over time so you have a whole bunch of money to deal with during your retirement years. For most people, that’s called “financial security.”

This information in the section will show you how you can build a truly comfortable retirement free of the onus of taxation. It will also show you, if you have already built large values inside of your retirement accounts, how you can potentially extract hundreds of thousands of dollars out of those accounts without paying tax.

One note of caution—I’ll discuss a number of tax planning options as you continue to read through this section (THE BIG RETIREMENT LIE). Taxes are not simple and apply differently to everyone. We recommend that you find a qualified tax or financial advisor who can help assist you with your specific tax situation. Later, I’ll will provide information that is devoted to helping you find just such a person if you do not already have one.

REMEMBER: The main goal of this information, however, is to help you get the IRS out of your pocket!

Contact us at 888-962-7768 or send your emails to support@bassfinancialsolutions.com.

article provided by Michael Reese

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