In
September of 2008, the Federal deficit just barely crossed the $10
trillion mark. Today, 5.5 years later, the deficit stands at $17.5
trillion. This is over a 70% increase to our National debt in less
than 6 years. This debt is not going to pay itself off. The writing
is on the wall; Federal income tax rates have nowhere to go but up.
Today, the top Federal tax bracket is just over 35%; almost half the
historical average since 1913. What do you think the highest Federal
bracket will be in 2024?
When
you take into account that the vast majority of all deferred
compensation plans (401k, IRA, TSA, etc) are all taxable upon
withdrawal, it goes without saying that every dollar you save for
retirement needs to be working in your favor. This means you will
need to have solid percentages in order to offset the additional
income you stand to lose to Uncle Sam. Unfortunately, the last 13
years have been anything but solid. In fact, most investors have
just been able to recoup the losses they incurred over the last
several years. There has been extreme volatility due to a domestic
terrorist attack and a Global recession, just to a name a few. The
market has endured with the assistance of Federal Stimulus, but not
without consequence. This is a long term problem we have to endure
with no history lesson as a guide.
I
believe the only way to plan for retirement today is consistency. A
steady return that can achieve the desired income results over a
specific time period. There is no way to give a guaranteed return on
your cash of 7% per year. However, you can add 7% to a non cash
value to determine what income you will be eligible for while
exempting your cash value from volatility; an income stream you can
count on for life regardless of future market performance.
Furthermore, an income stream that can be stopped and started at your
discretion while you still have access to the cash value.
Lifetime
income is aggressively being pursued by both retirees and future
retirees through an income stream that is guaranteed for life,
regardless of what may lie ahead. These are guarantees that many
Americans are seeking instead of rolling the dice in the market. I
remember about a year ago I met with a prospect (now a client) that
said “I don’t know what I have in my 401k (the current balance)
because I don’t need that to live. That money is bonus money that
is off limits today. All I want is to know that I can keep the
lights on and enjoy the little things in life without having to go to
work every day”. The fear of not having enough money in
retirement is a common concern that I hear on a regular basis,
especially with the terrible state that Social Security is in. The
average American wants relaxation and comfort in retirement without
the worry of where their check is coming from. Lifetime income
provides all of this and more.
Make
no mistake about it; rising taxes are just around the corner. The
Federal deficit has increased by 70% over the last 5.5 years. The
Federal Government is still purchasing Government bonds today at $45
billion per month with QEIII (Quantitative Easement III) to help the
economy along. Without financial guarantees of lifetime income, what
solution can you rely on to give you the comfort in retirement you
deserve? How else can you ensure that money will be there when you
need it down the road? We have all been exposed to how much money
you can realistically lose in the market. Granted, the market is on
a rebound; but for how long that will last is anyone’s guess.
There may not be a more perfect time to lock in your gains for a
guaranteed check for life.
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