Financial myth: The smart, easy way to save taxes is with a government-sponsored retirement plan like a 401(k), 403(b) or IRA.

Jack saved $20,000 into a retirement account as a young man.  With a wife, three kids and a mortgage, he wasn’t paying much in taxes, but the money he put back and the $1,000 he saved in taxes felt like a wise decision at the time.  Now, with a successful career behind him, he’s drawing out his first retirement check.  The kids are grown, the house is paid for, and he’s in an effective tax bracket of 20%.  His $20,000 has grown to $80,000.  He draws out the $80,000 and finds that repaying the $1,000 tax he 'saved' now costs him $16,000.  Jack’s account grew to 4 times his investment.  The government’s grew 16 times. 

Are you building your retirement on a foundation of money borrowed from the IRS?  And your goal is to be debt free?  Washington elites have the right to change the debt you’re carrying on that account at any time, retroactive to the day you borrowed those tax dollars.

The last time the government was this deep in debt (World War II) our grandparents paid income tax rates as high as 94%.  The poor in those days paid 23%.  Government debt today is substantially higher than in World War II, and many of our elected representatives are pushing for income tax rates in the 50 to 70% range.  

And our founders thought taxation without representation was bad?

Take out your account statement, look at the balance, and answer one simple question for yourself:  How much of your retirement account belongs to you, and how much belongs to the IRS?  Given the events of the past two years, what are the odds the IRS doesn't rake a bigger share of your money off the table, and soon? 

We’re in the lowest tax rates we’re likely to see for the rest of our lives.  Would you like to discuss an exit strategy, before tax rates get completely out of hand?

This hypothetical example is used for illustrative purposes only and is not representative of actual results