What to do About that 401K???

If you look at the Personal Finance section of the Wall Street Journel today, you will see headlines such as:
"Baby Boomers Find 401K's Fall Short"; "Which Stocks Will Rise?"; "Big Banks Start Charging for Once Free Services!"; "Why Stocks Tanked..."; "What to Do as Colleges Cut Back of Financial Aid"; and "Banks push for Bigger Down Payments!".

What is all that telling us? Well, how about our dollar is getting weaker and is worth less today, so lenders, organizations, institutions and businesses must find ways to cut back in order to survive without actually charging you more! And, sometimes they have to charge more, too! This is not anything new, though. Look back in history as far back a Julius Caesar and you will see how he tried to make his riches go further and how merchants reacted by raising prices.

What is the point of my post, you ask? Well, in a previous post I mentioned an article about baby boomers, getting ready to retire, expressing their frustrations because their retirement account (401K and other qualified plans) was not what they expected it would be at this point in their lives! So, they continue to work..!

One of the things that they may also not have thought about is how much tax they will pay when they begin drawing that money out of their plan! One of my collegues recently wrote an article stating that the Federal Budget Deficit is growing by almost 4 Billion dollars per day! Most of us cannot conceive how much four billion is, never mind a deficit growing by that amount ... per day! He poses the question, where are government officials going to find the money to pay down the deficit? Well, most of us know the answer and safe to say, almost every one of us is not happy with the answer! The government may cut some programs and reduce spending on others, but the old stand by is standing by once again. Enter... Higher Taxes!

So, what happens to the money that you deferred paying taxes on when you put it into your qualified plan? You avioded the tax on the seed amount which you invested each month and now that it has grown, if it has grown... you will not only pay the tax on the amount you withdraw, but you will pay the tax at the going rate when you take the distributions! So, each time the govenment officials decide they need more money, and they increase the tax rate, guess what happens? That money you had put away in your qualified plan is taxed at a higher amount, meaning you get less money from your distributions!

Simply put, it does not have to be that way! I have been Blessed to find another way and share it with my clients, helping them to avoid the pitfalls of the qualified plans. The plans are ingenious, but with few exceptions, ingenious for the government, not for the individual using the plan!

My collegue tells another story about obtaining a loan from your bank. The bank rep says to you, no problem, you are instantly approved and here is the money. When you ask what are the terms and the interest rate, the rep simply states, don't worry about that, the bank is doing well and we don't need the money right now. When we decide on terms and payment, we will let you know! My collegue asks, how many people would take that loan? Well, probably no one, right? His point?... that is exactly what you are doing when you invest in a qualified plan!

So not only did you endure the intestinal fortitude it took with all the market risks you subjected yourself to over the years, but now what money is left is now subject to the going tax rates and you will ultimately pay more tax on the money you managed to save. You also did not have access to it without penalty!

Seeing this more clearly, you are now wondering what are the alternatives. Well, to the right of this post in the right margin, there is an invitation to a Night of Clarity. Click on it and register to learn more about privatized banking! If nothing else, it will be an education that you will never get from your local bank!  you can also watch a two minute video and request additional information. I will be happy to speak to you about banking and how you can insure your financial future!