We wish the next President the best and hope they do what they can to make America stronger and safer for not only next year, but for generations to come. At the same time, we realize that often what our political leaders say in public speeches and what becomes a reality are often too different things.
Remember when George H. Bush’s famously said, “Read My Lips, No New Taxes.” As we now know, it didn’t work out that way. Politicians on both sides of the aisle seem to get away with broken promises, each and every election season.
Regardless if promises from either candidate materialize, there is one ugly truth that our next president will be faced with: our nation’s debt is skyrocketing and it’s hard to imagine that will change any time soon.
The government has the ability to raise taxes to cover debts; a family doesn’t have this luxury. According to USDebtClock.0rg, The US National Debt is now over 19 trillion dollars. That means every US Taxpayer would now owe over $165,000 to cover the current national debt. Realizing these unfunded liabilities are a huge concern for our Country.
What is the solution?
The government could lower benefits, raise taxes, or devalue the US dollar. Those are the choices. If we consider the fact, that a majority of retirees currently depend on Social Security for a majority of their income, do cuts make sense there? If tax rates are at historic lows could we see tax rates go up in the future? Or will our Country continue to devalue the US dollar to new record lows?
Where does that leave you?
You can choose to focus on what you CAN control rather than what you CAN’T. If you choose to take control of your own future, then take steps to limit you and your family’s future exposure taxes. The way to do this is to diversify money into tax-free accounts.
How much should be in allocated in tax-free accounts? The answer is unique to your own financial situation. The best way to figure this out is to get together and talk with us as well as your accountant to determine the right amount.
In our opinion, a good plan is to have plenty of money in both tax deferred and tax free accounts. That way, no matter what our political leaders decide to do, you and your family can draw money from the bucket of money that makes the most sense for you.
Roth conversion might be a good idea for you and your family before the end of the year. Or, shifting money into an insurance account can be a great way to not only create tax benefits, but it can also be a way to safe guard your investments. To find out how this applies to you, just give us a call.
Whatever you do, don’t leave that choice up to our political leaders, as taxing retirement accounts may be the solution to our country’s current and future debt problems, since that’s where the money is.
We realize, and hopefully others do too, that political speeches and campaign promises should be uplifting – but we should also be wary in relying on them. Just remember financial decisions now and in the future will come out of Washington that will be beyond your control. At the same time, each of us as individuals have the ability can make decisions within our own control to be more financially independent.
Nolan Baker and Mark Clair
**Insurance guarantees based upon the claims paying ability of the insurance company.