Washington Equity Management

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:

 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up in the future, then the conventional wisdom that says you’ll be in a lower tax bracket when you retire probably is no longer valid, is it?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.

Articles 401(K), low risk investment, private pension, retirement, taxes

Just read again about the alphabet soup prospects for economic recovery- V? U? L? W? Or could it be  inflation, deflation or depression or a lost decade for the US or…?  Here’s a slant with rationale mainstream media misses, dismisses or doesn’t want you to think about.

Have you heard anyone lately comment about how time flies?

Next time you hear someone say ‘time flies,’ ask them to what are they referring?  Could they be referring to all the time that has passed by while they’ve not bothered to fund their retirement account, which means they’ll probably be working into their late seventies, or longer?  Then they mean, ‘woe is me.’  And that means ‘woe are us.’

For several years, there’s been a peculiar kind of self-denial practiced by Americans.  For over 85% of the prospects and clients we meet with, there is no way they can retire at the age of ’65′ and expect to enjoy a quality of life comparable to what they’re accustomed for their probable life expectancy.  A 65 year old today has a high probability of living into their 80’s.  If they’re happily married, at least one of them will likely live into their 90’s.  They might live to regret it.

Over 85% of those we meet will consume all of their retirement money and have only Social Security support within 7 or 8 years of retirement at age 65, if they budget a lifestyle to which they’re accustomed.  Even when they scale back their lifestyle by 25% to 30%, they find they will likely outlive their money by a number of years.

It seems Americans don’t know how to interpret mathematical messages very well.  Simple math shows them they’re out of money well in advance of their probable life expectancy.  Yet, they go ahead and add a new wing to the house or buy a new car or sit on their hands rather than re-focus their efforts to make sure they’re not eating crackers and cat food in their early to mid 70s.

For the first time in nearly a decade, the savings rate has taken a steep jump UP, albeit for unfortunate reasons.  As a result of the market downturn of 2007-8, people’s retirement accounts got clobbered, losing 40% plus or minus.  That’s a lot of money that needs to be recovered.  It takes longer to make money in the market than it does to lose it.  Folks need to start saving like there’s no tomorrow.

While the stock market was taking a swan dive, real estate values have swooned as well.  Whatever home equity was earmarked for retirement has evaporated for many, dramatically impacting plans for those whose retirement was only a few years away.  Folks really need to start saving like there’s no tomorrow!

Baby Boomers are the largest and perhaps the most influential demographic group in America’s history.  Elder Boomers have begun to retire and the ranks hope to follow suit.  But how well have they prepared for retirement?

Baby boomers have lived large and to the limit.  They’ve taken on debt as if they had the government’s power to print money.  Their homes have been used as an ATM for the past few decades.  That equity has been consumed in hedonistic pleasures rather than conserved and increased in prudent investments.  Home values have declined and stolen whatever equity might have existed and left many poor planning boomers with a mortgage that exceeds the value of their home.  If home equity was factored in as part of their retirement plan, that amount of support now needs to be replaced.  Better work more and save like there is no tomorrow. 

Not only do people need to rebuild their savings, retirement accounts and lost equity in their homes, they need to pay down the record levels of debt they’ve built over the past several decades.  The figures are readily available on the internet.  One USA Today study shows household debt increasing from $84,000 in 2005 to over $112,000 in 2007 – and that doesn’t even include mortgage debt or their share of the government’s promises of unfunded entitlements.  The media uses this as a second major reason why the savings rate has climbed so quickly in mid 2009.

Up to now, we’ve considered only the cash flow management behavior of consumers.  As businesses have seen sales drop, they’ve adopted a similar conservative posture of preserving capital.

So what does this all mean?

If people (and businesses) are saving, that means they’re not spending.  And, if they’re not spending, but with-holding their money from chasing goods and services in the economy, how will that affect the pricing of the goods and services exchanged in our economy and what will be the result?  Can we look forward to a V-shaped recovery, an L-shaped recovery, hyper-inflation or deflation in the years ahead?

Inflation or deflation results from the amount of money chasing after goods and services in the economy.  When there is more money circulating in the economy to spend on cars, houses, etc., it tends to drive prices up.  But when there is less money circulating in the economy, prices tend to drop to attract those rare funds that are being spent.  It’s a basic supply and demand proposition.

Of course, the government has flooded the economy with freshly printed money, but how much of that has found its way into healthy circulation?  Most of it has gone toward paying for – bailing out – the mistakes of special, favored, presumed important entities that must be saved at all costs.  In order for the government’s tactics -injecting new money into the system-  to work in a credit-based system, borrowers need to borrow and lenders need to lend.  So far that’s not happening.

If you had to recoup significant market losses in your retirement accounts AND rebuild lost equity due to a decrease in home value AND reduce debt loads to a more manageable level, would you want to borrow more money?  Would a lender want to lend you more?

Many main street pundits believe that once the record level of newly printed money finds its way into the economy, we’ll see hyper-inflation never experienced before in America.

But as Americans realize the government will not be able to honor the promises it has made for their future, namely Social Security and Medicare, they’ll be forced to take matters into their own hands and save even more.  What choice is there?  What would you do in those circumstances?  Spend or save?

You might hear a huge sucking sound as money is sucked out of the economy and saved by people frantically trying to correct a lifetime of over-indulgent living and lack of planning.

So how does it look to you?  Short term?  Long term?  Inflation?  Or deflation?

And what’s your plan to survive it?

Articles Baby Boomers, bailout, debt, deflation, Equity Management, inflation, real estate, retirement, savings, stocks, unfunded entitlements