In this week’s Hidden Wealth Review, I teach that people are paying more taxes in retirement then they did in their highest wage-earning years. It’s not just federal taxes that are going up, new taxes are coming at us from all directions.
Seattle mayor Ed Murray describes his city’s new tax on the affluent as “a new formula for fairness.” Washington is one of just nine states that have no state income tax. So, to “even things out,” Seattle is going to tax “the makers” and give that money to those I call “the takers.” The problem is that the takers are going to take more and more unless we, the makers, get a better plan for ourselves. Seattle’s plan is that, if you work hard and make more money than your neighbor, you need to pay an extra 2.25% so that things are “fair.” The good news is we have the better plan that avoids more taxes.
I met with a client couple this week who had saved about $600,000 in IRAs. The Required Minimum Distributions (RMDs) from these IRAs are now causing 85% of their Social Security to be taxed. Their RMDs have created more federal tax liabilities which, in turn, have created more state tax liabilities. As a result, they are paying more taxes in retirement than they did in their peak, wage-earning years. The husband told me, “Had we known then what we know now, we never would have put the first dollar in an IRA or 401(k).”
The other side of the “fair formula for higher taxes” equation is the projected-to-be-passed legislation that forces inherited IRAs to be liquidated in five years. The 100% passed Senate version of the bill applies to all inherited IRA savings that are passed on to adult children. It requires the distribution of the inherited IRA’s entire value in under 5 years. Most people who inherit IRAs are in their peak wage-earning years and they are already paying a large percentage of their income to taxes. If this legislation passes, the government keeps about 50% of each inherited IRA dollar. Learn how you can be in full control of 100% of your savings that’s passed on to your children.
To register, go to www.RetirementProtected.com, enter the required information and submit your registration. Once you submit your information, you will receive an email containing a personal link to join Tuesday’s event. But hurry, there is limited space and this event fills quickly. Spouses are strongly encouraged to attend this event together.
When you register and attend the webinar, you’ll receive an e-copy of my latest book, The Baby Boomer Retirement Breakthrough. This book teaches you the top five retirement risks and the unique solutions you can use to avoid them.
(855) No Tax 2 U
Here’s to your Hidden Wealth,