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Missed Fortune – Stopping Those Who Would Feed Off Your Success

Posted on | July 22, 2013

To Government You Look Like a Source of Revenue

It wasn’t so long ago that the government of Cyprus voted to seize the money it needed to remain solvent from the bank accounts of its citizens. But the people of Cyprus aren’t the only ones who ought to be nervous about the safety of their savings.

President Obama’s most recent budget tries to limit the amount of money that highly successful Americans will be allowed to keep in their IRAs, 401(k)s, and pensions and profit sharing plans. Administration officials admit that this action would raise roughly $9 billion over the next decade.

What these officials are thinking is that the wealthy can save a lot more money in their IRAs or 401(k)s than they would need to fund what some would consider a “reasonable” retirement. They’re essentially saying that those who saved must take some of their money and give it to those who didn’t save.

If this seems like déjà vu, it’s because we’ve seen this tactic before when politicians repealed what they called the so-called success tax back in 1997. It is a tool for politicians to redistribute wealth. The way they see it, if you were a little too successful in accumulating your retirement savings, you get smacked with an extra 15% excise tax.

Other governments around the world are also looking to grab a portion of their citizens’ retirement savings. Australian citizens who were responsible in saving for retirement may be hit with a new 15% tax on all income over $100,000 drawn from their nation’s equivalent of an IRA.

It’s essential to remember that this income is supposed to be tax-free since they already paid the taxes on it before putting the money in their accounts. Now they’re being double taxed.

If you are someone whom the government considers to be too well off, you probably will be targeted for increased taxation.

What To Do About It

Just because a person is very successful doesn’t mean they won’t make bad decisions. For instance, the folks who choose to keep their retirement saving in IRAs and 401(k)s are too often simply following the crowd. Most believe that they’ll end up in a lower tax bracket when they retire and they can’t imagine outliving their money.

IRAs, 401(k)s and even Roth IRAs can no longer be considered “good enough”. This is because they still leave people vulnerable to tax hikes and ending up in a higher tax bracket at retirement. With this comes the risk of possibly outliving their savings.

Unless they rethink their strategies, many of these good people are in for a very rude awakening. What if there are better ways to protect your savings from higher taxes?

For example, a strategic rollout that allows an individual to switch their money out of those IRAs and 401(k)s into a genuine tax-free vehicle where it remains tax-free from that day forward. Once you understand it, it’s the kind of thing they’ll share with their successful friends.

If you’re serious about protecting your retirement nest egg from higher taxes, you’ve got to keep your money tax-free. You need to counter the effects of rising inflation by tying your returns to those things that inflate. And finally, when the markets are volatile, you’ll need strategies to protect your money during down times so you don’t lose principle, yet that allow you to participate in any market upside whenever the markets recover.

Ideally, you should be enjoying liquid assets safely earning predictable rates of return.

To get to the brighter future you are planning for, it’s essential to cut through the noise to understand what you can actually control and what really matters most. Most Americans tend to default and keep doing what they’ve always done. To get different results, you’ll have to learn to focus your time and money on the best choices.

And that means you’ll have to know exactly what they are.

Learn what more by visiting with a wealth architect today.

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

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