It\u2019s no secret that income taxes are the silent wealth-killers, preventing people from easily achieving their financial goals. That\u2019s why we urge our clients to use tax-deferred vehicles, whenever possible.<\/p>\n
To truly appreciate just how much taxes eat into your ability to generate significant wealth, consider the following.<\/p>\n
If you double a penny every day for 30 days, you wind up with an unbelievable amount of $5,368,709.12. But, if you paid 28% in income taxes every day that penny doubles. You\u2019d have a paltry $48,714.41. Thus, it\u2019s clear that tax-deferred retirement accounts can add a lot of money to your long-term wealth.<\/p>\n
And don\u2019t worry about the taxes due on your $5.3 million. Even if your now-huge net worth pushed you into the 50% estate tax bracket, you\u2019ll still have more than $2.6 million left over after taxes – a lot more than the $48,000 you\u2019d have by paying taxes each day on the pay-as-you-go system.<\/p>\n
Let\u2019s look at some real numbers and time frames.<\/p>\n
If you invest $100 per month ($3.33 per day) for 35 years, tax deferred at 10%, you will have $382,827.67. However, if you are in a 28% income tax bracket, and you pay taxes each year on the accumulation, in the same 35 years, you would only have $190,056.24 or about half the taxed deferred amount.<\/p>\n
Thus, there is no question that tax deferred investments offer better accumulation on your money. But consider, that if the money is for your retirement, then your primary consideration is retirement income. Your tax deferred investment of $382,827.67 (@10%) will generate an after tax annual income of $27,563.36.<\/p>\n
But, if your tax deferred investment also offers tax free income, you could then have $38,282.77 of annual income during retirement. A significant difference.<\/p>\n
There are many investments that offer the advantage of taxed deferred accumulation: the 401K; 403b; Traditional IRA; Savings Bonds; Annuities; TSP; qualified pension plans.<\/p>\n
However, there are only two investments that offer both tax deferral and tax-free income: the Roth IRA and Cash Value Life insurance.<\/p>\n
Yes, that\u2019s right \u201cCash Value Life Insurance.\u201d Surprised? Well, you\u2019re not alone.<\/p>\n
While cash value life insurance may not have the best investment returns, it does offer some very real advantages during retirement. And, if you need the protection life insurance offers, that makes it even more advantageous.<\/p>\n
<\/p>\n
<\/p>\n","protected":false},"excerpt":{"rendered":"
Income Taxes, The Silent Wealth Killer It\u2019s no secret that income taxes are the silent wealth-killers, preventing people from easily achieving their financial goals. That\u2019s why we urge our clients to use tax-deferred vehicles, whenever possible. To truly appreciate just how much taxes eat into your ability to generate significant wealth, consider the following. If […]<\/p>\n","protected":false},"author":4,"featured_media":476,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"nf_dc_page":"","footnotes":""},"categories":[1],"tags":[],"class_list":["post-475","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/posts\/475","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/comments?post=475"}],"version-history":[{"count":1,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/posts\/475\/revisions"}],"predecessor-version":[{"id":477,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/posts\/475\/revisions\/477"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/media\/476"}],"wp:attachment":[{"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/media?parent=475"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/categories?post=475"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/foundmoneyconsultants.com\/index.php\/wp-json\/wp\/v2\/tags?post=475"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}