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Missed Fortune – With Taxes Rising & the Value of the Dollar Falling, What Should You Be Doing?

Posted on | February 9, 2010

When David Walker, Comptroller General of the United States Government Accountability Office (GAO), left office about two years ago, he stated he needed to retire so he could tell the American public the truth.

debttrap 300x299 Missed Fortune   With Taxes Rising & the Value of the Dollar Falling, What Should You Be Doing?The truth is we currently have national debt that exceeds $13 trillion, which represents a liability of $43,000 per American citizen.

It’s also estimated that this year’s deficit will equal 2009’s deficit and will likely add about $1.6 trillion to the debt.

Yet we continue to experience stagnant unemployment, shrinking tax revenue and a struggling economy for the foreseeable future.

Not only that, but the Trustees of Social Security estimate a current unfunded liability in excess of $100 trillion in 2009 dollars.

This means that the federal government has obligated itself to pay more than $100 trillion over and above any taxes it expects to receive.

In other words, that’s how much would have to be invested at U.S. Treasury rates to pay the future liability owed to Social Security recipients who have faithfully paid into the system during their careers.

Most people can’t even begin to comprehend what $100 trillion is. It’s “100” with 12 zeros to the right. Just $1 trillion would be $1 dollar bills lined up end-to-end from here to the moon and back—200 times!

Even though many believe that Social Security is our greatest entitlement problem, Medicare is six times larger in terms of unfunded obligations, according to David Walker of the GAO.

It would require $700,000 from every full-time working individual in America in order to cover this huge liability. How is that going to happen?

On top of that, Congress estimates that if the proposed health care reform comes to fruition, it will be at an estimated cost of just under $2 trillion during the next ten years.

In the meantime, the interest alone on the national debt accrues at $41 million an hour (just under $1 billion a day)—that’s $690,000 per minute, or $11,500/second!

When individuals find themselves with more outgo than income, they are forced to either cut expenses or increase income. Well, the federal government is definitely not cutting its spending, so it is clear it will be forced to raise taxes dramatically and will likely be printing more money.

The Congressional Budget Office estimates that, by mid-century, a middle income family will have to pay two-thirds of its income in taxes!

I can confidently assure you that:

  1. Your current tax bracket will likely be the lowest bracket you will ever be in, and
  2. Your money will never be worth more than it is today.

So, what should you be doing?

Many smart people are now converting their IRAs and 401(k)s (and other qualified accounts) by doing what I call a “strategic rollout.”

This is a method of taking care of taxes now on those accounts at a lower rate and repositioning the money into vehicles that will accumulate tax free from this point forward and more importantly, will provide tax-free income later.

Why wait for your IRAs and 401(k)s to recover from their losses and then pay tax on that higher amount later? You can either pay the IRS now or you will pay them more later.

Now is the time to convert your IRAs and 401(k)s to better plans. There are safe and proven strategies that will help you get your future back!

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

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One Response to “Missed Fortune – With Taxes Rising & the Value of the Dollar Falling, What Should You Be Doing?”

  1. Karen
    August 4th, 2010 @ 8:16 am

    and what are those strategies and how do you convert 401ks? thanks!

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