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Missed Fortune – Who is Controlling Your Retirement Goals?

Posted on | August 8, 2010

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Can Your Retirement Plan Withstand Taxes & Inflation?

Too many retirement plans fixate solely on a dollar amount.

These plans, however, fail to explain what that particular figure will actually be worth to you.

To make this clearer it is important to understand the rule of 72. The rule is to take whatever expected interest earned will be and divide that number by 72.

Your answer will be how long it should take you to double your money.

To be conservative, use 7.2%, dividing that by 72, you can expect your money to double every 10 years.

What is $125,000 today will be $250,000 in ten years, $500,000 in twenty and $1 million in thirty years.

Sound great? That sounds like a fairly good size nest egg.

But where other planners fail to educate, Missed Fortune advisors want you to understand what that figure really means.

As your money is doubling, it should be expected that inflation will be occurring.

Taking another conservative 5% figure, using the same rule of 72, the cost of living would double in that same 30-year period.

So your $1 million dollars is actually only worth $500,000. Still a decent amount — supposing you don’t mind your expected buying power to be cut in half.

Because most retirement strategist are pushing investors to use IRAs and 401(k)s, you still have to figure in the percentage of that money that will be taxed as well.

Assuming today’s tax rate, another third of that money would no longer be at your disposal.

Many economists actually expect this rate to increase as much as 15%, so that actual figure will be closer to ½ of the money going to taxes.

What Strategy Will Protect You against Taxes & Inflation?

Most advisors who promote IRAs and 401(k)s don’t consider the variables above.

Their plans are like asking you to get into a boat and row at 12 mph and they expect that every hour you will have traveled 12 miles.

They fail to factor in the 8 mph current you are rowing against.

Implementing the strategies we teach, you can learn how to build your nest egg in a tax-free environment to keep what you have worked hard to earn.

Furthermore, because inflation also inflates rates of return, we can teach you how to have a 7% rate of return greater than the rate of inflation so that your nest egg will be the appropriate size to meet your financial and retirement goals.

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*Life insurance policies are not investments and, accordingly, should not be purchased as an investment

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