Is Funding a 401K a Mistake?
Funding a 401(K) could be one of the biggest mistakes you could make, according to Pulzar Inc. research. The research shows:
- Your 401(K) could cause you to pay higher taxes than necessary when you retire.
- Your 401(K), subject to market volatility, could leave you out of money before you die.
Does your 401k plan provide protection against negative market performance?
Most Americans have lost 20-40% in their investment accounts during the past 18 months. Yes, they’ve rebounded in the past 6 months, but what built in protection is there against another downdraft and future losses?
Does your 401k plan offer strong, solid performing options? Mr Brooks Hamilton, who designs 401K plans for B&J Partners, stated on 60 Minutes that most of the funds in 401k plans are dogs.
How has your retirement account performed over the past 10 years? Are you ahead or behind where you were in 1999? If you invested $100,000 in an S&P 500 Index Fund, here’s what you’d have in January of 2009:
|
2000 |
-9.10% |
$90,900 |
|
2001 |
-11.89% |
$80,091 |
|
2002 |
-22.10% |
$62,391 |
|
2003 |
28.68% |
$80,285 |
|
2004 |
10.88% |
$89,020 |
|
2005 |
4.91% |
$93,391 |
|
2006 |
15.79% |
$108,138 |
|
2007 |
5.49% |
$114,074 |
|
2008 |
-37% |
$71,867 |
|
2009 |
|
$71,867 |
401(K) Tax Myths:
Do you know how much the tax deductions from retirement contributions you take today will cost you tomorrow?
Is your 401k/tax-deferred retirement plan actually setting you up to pay higher taxes in retirement, and have you out of money before you die?
Tax deferred retirement plans, including 401K plans, were set up as much to benefit the government as you. Calculations show that the average American who lives 20 years in retirement, will pay 5 to 8 times more taxes on distributions in retirement than he saved in taxes from contributions during his working years.
Do you know how’s it going to work out for you?
We live in complex times. Government spending and debt levels are the highest in history. Unfunded government entitlements are over $50Trillion. How are we going to pay for all this? What do you think? Are the low tax rates we’ve enjoyed for the past 30 years going to hold, stay about the same, or do you think tax rates will creep up in the future?
If tax rates go up, and you’ve deferred payment of your taxes to some future date when tax rates are higher, what will that do to your spendable income? If tax rates creep up in the future, then the conventional wisdom that says you’ll be in a lower tax bracket when you retire probably is no longer valid, is it?
How are you preparing for this? Do you know what results await you down the road? Are you certain you won’t outlive your money?
Most Americans have been brought up with the same basic goals-
- Get a good education.
- Get a good job.
- Buy a house. Pay it off as soon as you can.
- Fund the company retirement plan as aggressively as possible.
- Retire at 65, if possible, and spoil the grandchildren.
If we all know this conventional wisdom and believe it works, then why did the Social Security Administration release these figures:
If you take any 100 people at the start of their working careers and follow them for 40 years until they reach ‘retirement age,’ here’s what you’ll find:
- Only 1 will be wealthy;
- 4 will be financially secure;
- 5 will continue working, not because they want to but because they have to;
- 36 will be dead; and
- 54 will be dead broke – dependent on their Social Security checks, relatives, friends, even charity for a minimum standard of living.
That’s 5% successful, 95% unsuccessful. How could good advice from widely accepted conventional wisdom produce such poor results?
If there were a better way to protect and grow your funds, when would you want to know – now, while you have time on your side, or when you’re about out of money? Small, strategic adjustments can make a significant difference. Over funding a 401(K) or tax-deferred retirement plan is not one of them.
Where you accumulate your money and how you access it in retirement is every bit as important as how much money you have.
If you’re already funding a 401K or tax-deferred retirement plan, you could already be making costly errors. Wouldn’t you want to know the impact of what you’re doing now will have on your future?
Take 17 minutes and view an important case study video about Bob and Carol. Click Here. Log in and click on ‘Bob and Carol.’ (The intro and concept videos are important, but the eye-opening numbers are in the case study.) Note the subtle, simple, cost-less changes that were recommended and the powerful impact these suggestions had on their income taxes and their retirement. Then call 206-388-4074 to run your own numbers through our proprietary process and see what the difference could be for you.
Clients who’ve implemented this very strategy have not lost a single dollar due to market performance during the last 2 years. Clients who’ve implemented this strategy over the past 10 years are over 2 ½ times ahead of where they’d be in an S&P Index fund. And they’re on their way to saving tens of thousands in income taxes. For some, it’s literally a Million Dollar difference for them and the lives of their heirs. Find out what the difference could be for you.
Call today.