How to save your retirement account NOW! (Part #1 of 4)
I’m putting this article in 3-4 parts as there is only so much space. My comments will be fairly in general as entire books are written on the details. Let me preempt by saying I have been a licensed securities and insurance advisor since 1976 (securities in 1984).
Many people were concerned on Oct 1987 about a 500 point drop in the Dow Jones Industrial Average (DJIA) – you know, that ‘thing’ they talk about every day in the news. The media started using terms heard only in the Great Depression. Then the late 1990’s has everyone thinking they were going to be ‘rich’ overnight – some were; most weren’t for various reasons. The year 2000 showed us what could happen when everyone isn’t paying attention and, frankly, that same thing has happened 3 more times since then. IRA and 401(k) accounts have lost 30-50% (being conservative here) 3-4 times in the past 11 years. Where has that left you?
Many that thought they could retire by now haven’t a chance to do that for, at least, another 5-10 years. You’ve heard it: “Yeah, my 401(k) is now a 201(k).” So, what do we do about this? Obviously the Federal Government isn’t helping us through this mess despite what they say or do.
So, I will give you a few ideas that will help you focus on some points regarding IRAs and 401(k)’s. Both vehicles are referred to as ‘tax DEFERRED retirement plans’ – meaning you are deferring your taxes until a later time. No matter how your tax bracket may go down upon retirement, you will still pay taxes on that money. By studying demographics, the US government knows how many will retire in any given year and what the average amount of collectible taxes will be. So they have an idea of what they can ‘collect and spend’ in any given year, right? They try to make that attractive by giving you the ability to ‘save towards your retirement’ by making the contributions ‘pre-tax.’ In other words, you don’t have to add the amount of your contribution to your taxable income.THINK ABOUT THAT! Okay, you get a ‘tax break’ now so you can pay taxes later. HOWEVER, most have lost 30-50% of their retirement account value anywhere from 2-4 times since roughly 2000. What's wrong with this picture?
Next week: (Part #2) I’ll be discussing how you can actually – AND FINALLY STOP – losing principal ever again. Period! That will be the segway to the final piece on how - under present rules - you can even have a tax FREE retirement plan. Retirement funds that are NEVER reported to the government and not subject to taxes - EVER.
Disclaimer: Because I am still registered I have to make the regulators happy. So, this is NOT an offer to buy/sell securities nor solicit insurance in any State.