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Missed Fortune – Don’t Follow the Crowd When It Comes to Retirement

Posted on | February 10, 2013

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No Safety In Numbers

When it comes to saving for retirement, most people prefer to follow the crowd. We think that if most people are putting their money into a 401(k) or an IRA, then they must be the best ways to save. But in this case, there is no safety in numbers when following the crowd.

One reason for this is that few people understand the difference between accumulating money in a tax-deferred account rather than in a tax-free vehicle. And they’re not alone. It’s shocking how many tax attorneys and financial advisors are unaware of how to accumulate money that’s truly tax-free.

Often when people hear the words “tax-free” they suppose that this refers to a tax loophole of some sort that Congress will soon take action to close.

But we’re not talking about a loophole. It is entirely possible, and perfectly legal, to accumulate money in a tax-free manner that has long been grandfathered into the IRS code for over 100 years. In fact, it’s likely the only thing excluded from funding Obamacare.

Once a person realizes that tax-free savings is possible, they understand that while the crowd’s preferred method of saving for retirement is popular, it’s far from the best way to save. But a lot of people don’t know what they don’t know.

The idea here is to empower yourself with knowledge. To understand how to create a dream solution that protects your money by allowing your retirement nest egg to accumulate tax-free.

Those who go the tax-deferred route will find, upon reaching retirement, that the taxes they must pay will devour anywhere from a third to half of their savings. A further complication that many will face is the dismal prospect of being in a higher tax bracket than they were in during their working years.

Without the deductions they used to enjoy and with higher tax rates looming, many people may outlive their retirement savings. The fact that they went with the crowd will be little consolation.

Fortunately, you have alternatives.

Break With the Crowd and Prosper

Whether you’re currently saving for retirement in an IRA, a 401(k), or a Roth IRA, there’s still time to position yourself for a brighter future.

Ideally, you’ll want to have your serious money in a vehicle that provides some key protections. It must have liquidity for those times when you need money. It should also provide safety for your principal so when the economy goes down your money is protected. This means that not only do you not lose money when the market goes down, but in those years that the market grows, your increase become newly protected principal.

Finally, this vehicle must earn predictable rates of return. People who have broken with the crowd and found the correct savings vehicle have been enjoying rates of return averaging 9.2% while netting 8.2% for the past 38 years. What’s even more impressive is that they’ve continued to outpace other savings vehicles during the last 10 years—the worst decade since the Great depression.

They’ve also learned how to rebalance and to use indexing to enjoy even better rates of return.

There are real benefits for breaking with the crowd by becoming educated about and implementing these alternatives that have existed for decades. Folks who do this arrive at their goal of financial independence much quicker. They also have much more money to show for their efforts.

For every million dollars they can generate up to $70,000 tax-free income that will last as long as they do without depleting their principal. Best of all, at the end of the day, your principal transfers tax-free to your spouse, your children, your church or whatever worthy cause you’d prefer.

If you knew that this alternative was available to you, why wouldn’t you do it?

Those who leave their money in IRAs and 401(k)s will have reason to kick themselves down the road.

But even if that’s where your money is today, you can get it out today with the least tax impact possible and get it into a vehicle where it will accumulate tax-free from that day forward. By linking your money to those things that inflate, you’ll no longer have to worry about inflation shrinking the purchasing power of your savings.

The only thing standing between you and that brighter future is the decision to take ownership and learn these strategies.

Start by visiting with a Missed Fortune advisor.

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

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