HOW DID YOU FEEL WHEN YOUR CPA OR FINANCIAL ADVISOR SHOWED YOU HOW MUCH TAX YOU WILL PAY IN RETIREMENT?

For most of us, the answer to this headline is, "Uh, well, we've never really discussed that." Given that the bulk of most people's retirement savings are tied up in qualified accounts like a 401ks, 403bs, or IRAs that we'll have to pay taxes on, SHOULDN'T we be considering taxes? Most people would agree that given the level of our government's spending, tax rates are likely to increase rather than decrease. Despite most so called experts saying, "You'll be in a lower bracket in retirement", none of my clients are seeking a lower income or lifestyle in retirement. If that is the case, does it really make sense to trap your life savings in an account that you will pay a higher tax rate on in retirement?

Like a farmer, would you rather pay tax on your seed in the spring or your harvest in the fall? The reality is that we're saving a small amount now but will pay a much more in taxes by paying taxes in retirement. There are alternatives such as a Roth 401k or Roth IRA but for 2021 your contribution is limited in the Roth 401k to $19,500/yr (an additional $6500 catch up if over age 50) and the Roth IRA is only allowable if you make less than $125,000/yr or $198,000/yr as a married couple filing jointly. Plus, you can only contribute $6,000 ($7,000 if over age 50) in to the Roth anyway so it's not very impactful for higher earners.

There are a number of strategies available that will allow MUCH higher contributions, tax-free growth, tax-free income (not a typo), and in some strategies additional bank money that can assist in the growth of your retirement savings (watch tomorrow's video for a snap shot of this highly advantaged tool). The bottom line, doing things the same old way is not going to get you where you need to be in retirement, especially if you've gotten a late start on saving due to kids, college, etc.

If you are in position to REALLY start attacking your retirement savings and/or better position your current assets, a 15 minute call with me will ascertain if any of these additional strategies may make sense for you. If you have a spare 15 minutes to see how you can better prepare for the next 30-40 years and have a Retirement of Steel, call me at 1-866-85-STEEL or go to MitchLyonsWealth.com.