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Missed Fortune – Who Do You Trust With Your Future?

Posted on | March 3, 2013

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Your Pocketbook Isn’t Lying

According to the Tax Policy Center, roughly 77% of American households will pay more in taxes this year thanks to the New Years Day agreement Congress passed to avoid the fiscal cliff.

There are several reasons this is will happen. Some of the Bush era tax cuts were extended temporarily, but others were allowed to expire. The media is reporting that the tax hikes in the legislation will only affect those earning higher incomes of $400,000 a year or more. But this is only part of the bill’s true impact.

Even if Congress goes the entire year of 2013 without another tax hike, virtually taxpayer will be paying another $500-$1,000 more in taxes this year than last year.

Even though this bill supposedly saved 99% of Americans from a tax hike, we’ll all be paying more since the Social Security payroll tax cuts have been allowed to expire. That will amount to a roughly $1,000 tax increase to a worker making $50,000 a year.

Everybody is experiencing the expiration of the payroll tax cut on employees FICA and Medicare withholding which jumped from 4.2% back up to 6.2%. This effectively means that most Americans will see a nearly 50% increase in the amount withheld from their checks for Social Security and Medicare.

There were also increases in capital gains and dividends for high income earners such as married couples filing jointly and earning over $70,000 annually and single earners making more than $35,000. The capital gains increased from 15% to 20%. And, finally, there was a phase out of the itemized deductions and the addition of a health care surtax of 3.5% that went into effect on all investment income.

The bottom line is that the higher income earners are really taking it on the chin but every income earner will notice they are paying more in taxes this year.

Though the fiscal cliff may have been avoided, serious issues like the debt ceiling and spending cuts were never even addressed. This means that economic uncertainty will not be going away any time soon.

This realization is prompting many Americans to key in on what is happening to their taxes and to ponder what they should be doing to immunize themselves from the effects of future tax increases.

Putting Your Future In Hands You Can Trust

With taxes headed higher, some folks are choosing to move their retirement savings away from tax-deferred accounts like IRAs and 401(k)s. Many use a strategic rollout to reposition their nest egg to a vehicle where it can grow tax-free. An example of such a strategy would be Maximum Funded Tax Advantaged (MFTA) Insurance contracts that have been grandfathered into the IRS code for generations.

Not only does your money grow tax-free, but also it transfers tax-free when you access it at retirement and when it goes to your heirs at the end of your life.

To understand the difference this tax-free growth makes, consider the following question.

If you had a $500,000 nest egg in your IRA or 401(k) 12 years ago, is it worth $1.5 million today? If the answer is “no” then it’s time to pay close attention.

Because that’s the kind of growth that was accomplished in maximum funded insurance contracts.

There’s a reason that affluent people and banks and corporations put their tier 1 assets in Bank Owned Insurance Contracts and Corporate Owned Insurance Contracts. They maximum fund it and take the minimum death benefit for the tax-free accumulation and growth.

That is where many people doubled and tripled their money during the worst decade since the Great Depression while most people in America barely broke even with their money in mutual funds

If you’re serious about taking control of your future and eliminating the dangers of rising taxes, you need to understand what even many professionals do not. There’s no shame in not knowing what you don’t know. But if what you always thought to be true turned out not to be true, how soon would you want to know about it? Most of us would say sooner than later.

Take the first step toward your brighter future 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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