What do you think of what is going on in our country these days? The Retirement Guys spoke at a recent conference of financial advisers and also had the opportunity to listen to several interesting and informative speakers.  One of the speakers spoke about watching a reporter from one of the top news networks interviewing an 80-year-old lady.  The lady was out working in her garden, and the reporter approached and asked the elderly woman if it was OK to ask her a question.  The woman agreed and the reporter asked, “What do think of what is going on in our country today?” The woman replied, “I think it is the most wonderful thing that has ever happened in our country.”   The reporter lost her composure and actually did an obvious double-take when she heard the response to her question.  She was so surprised that she asked the question again.  The lady repeated her answer, “I think it is the most wonderful thing that has happened in our country.”  The reporter asked why she would say that. The lady replied, “Because it is time for Americans to take responsibility for their own lives.”

We utilize strategies that we believe will have a great effect on our client’s financial future.  Strategies such as Roth IRA’s, cash value life insurance, and 529 plans. We feel it is important to stay informed on what is going on in the world and in our country, and how it may affect our clients. If you don’t understand this information, your family’s financial future could be in jeopardy.

What are you talking about, you ask? Consider for a minute what is going on in the world and our own country. Ask yourself a couple key questions. First, do you think taxes are going up in the future, yes or no?  Second, do you think benefits will be reduced in the future, yes or no? The concern here is whether the government will have enough money to go around to solve all of our problems.

We have already seen massive bailouts and the money is going to have to come from somewhere. The folks who will pay for this are the taxpayers. The disturbing thing is that according to a Tax Facts report from the Tax Policy Center, only 53 percent of single filers and 72 percent of married filers actually pay tax.

Let’s look at government benefits for a moment. If you are receiving Social Security and look closely at the statement, you will notice that it says that Social Security will go into negative cash flow by 2016. The government has been using Social Security surplus to pay down our deficit. We pointed out in our “Social Insecurity” column a few weeks ago, Social Security is actually going to go into negative cash flow this year! If Social Security is heading toward bankruptcy, $14.5 trillion liability, do you think it will be fixed? We would say it is very probable, but at what cost?  This will likely mean higher taxes.

According to The Washington Post, Medicare has unfunded liabilities that exceed $30 trillion. Considering Social Security and Medicare liabilities, which will be easier to fix? If we are going to have a hard time fixing Social Security, how will we fix Medicare?  The biggest age group we have in our society are those considered “baby boomers.” How many baby boomers are on Medicare? If we consider that they were born between 1946 and 1964 and qualification for Medicare is at age 65, that would mean zero. Having unfunded liabilities for Medicare in the trillions of dollars and considering we have not begun to pay for the baby boomers yet is scary. The consequences again will probably mean higher taxes.

What does this mean for you? It means as the 80-year-old lady said, “taking responsibility for your own life.” We deal with many folks with retirement accounts. Typically, a large portion of the typical retiree’s savings is in an IRA, 401(k), 403b or some type of retirement account. In a traditional retirement account, the money has yet to be taxed. If taxes are going up in the future, it may be important to create a distribution plan now to help reduce or eliminate taxes. If the taxes on these accounts are not dealt with now, they will be dealt with later, which could have a disastrous result. Take advantage of what the current tax laws are now before they change.

For more information about The Retirement Guys, tune in every Saturday at 1 p.m. on 1370 WSPD or visit www.retirementguysradio.com. Securities are offered through NEXT Financial Group Inc., Member FINRA / SIPC. NEXT Financial Group, Inc nor its representatives provide tax advice. The Retirement Guys are not an affiliate of NEXT Financial Group. The office is at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537.

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This entry was posted on Thursday, September 2nd, 2010 at 5:42 pm and is filed under Retirement Guys, Toledo Business Link.
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