Plan Now to Shield Yourself From Higher Taxes: Tax Tips to Help Avoid the Coming Tax Tsunami by Pamela Yellen

Money
2 months ago
Plan Now to Shield Yourself From Higher Taxes: Tax Tips to Help Avoid the Coming Tax Tsunami

The Federal debt has surpassed the size of our entire economy. That hasn't occurred since the end of World War II 75 years ago. And it doesn't even include President Biden's $1.9 trillion COVID bill and other plans in the works to eliminate the Trump tax cuts, raise the corporate tax rate and as much as double the capital gains tax rate.

This revelation from the Congressional Budget Office deserves more attention than it's receiving "because Americans will be paying for it for decades," the Wall Street Journal Editorial Board notes.

This has made saving in tax-deferred accounts like 401(k)s and IRAs much less appealing going forward. The Society of Actuaries has pointed out that if all things are equal, you'll come out the same whether you defer your taxes until you take retirement distributions ... or you pay your taxes up front and then can take tax-free withdrawals. However, if tax rates go up over the long term – which now appears inevitable – you will end up paying far more in taxes.

Most people look at their retirement plan balances and think it's all theirs. They often forget they'll owe the IRS taxes on every penny they've put in and every penny of growth they've deferred for decades. According to the Center for Retirement Research, "it's a very big deal when people realize they only have two-thirds or three-quarters of what they thought they had." And that statement was made several years ago before the federal debt exploded!

To help savers protect themselves, I recommend The Bank On Yourself safe wealth-building strategy. Advantages of this method include:

  • Funds can be accessed tax-free, under current tax law.
  • Income from these plans does not cause Social Security benefits to be taxed, unlike 401(k) and IRA withdrawals. It's fairly common for even middle-income folks to owe taxes on up to 85 percent of their Social Security benefit. However, the income you take from Bank On Yourself is not included when the IRS determines whether (or how much) of your Social Security check is taxed.
  • Income isn't subject to capital gains taxes.
  • Does not increase Medicare premiums (income from conventional retirement plans like 401(k)s and IRAs can increase premiums by as much as 350 percent.

You can grow your nest egg safely and predictably every single year, shield yourself from taxes that can only go higher, and enjoy liquidity, flexibility and control of your  money.

The content on 30Seconds.com is for informational and entertainment purposes only, and should not be considered financial advice. The opinions or views expressed on 30Seconds.com do not necessarily represent those of 30Seconds or any of its employees, corporate partners or affiliates.

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Julie Rose
So helpful, thank you.
Elisa A. Schmitz 30Seconds
Thank you for helping us plan ahead to address these tax issues, Pamela Yellen !

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