The US is 25 Trillion dollars in debt and with all the unfunded liabilities such as Social Security and Medicare, the possibility of increased tax rates are high. Americans have to prepare themselves for the coming tax storm.
There are really only four ways to resolve our fiscal crisis. You decide what you think the most likely solution will be. There are really only for options: Cut expenses, borrow more money, print more money, or raise taxes. It's much easier to raise taxes than it is to get rid of a government program.
Tax-deferred vs. Tax-free. Which one is better? Which one should you be pouring your money into? The true purpose of a retirement account is NOT to give you a tax deduction. The true purpose of a retirement vehicle is to maximize cash flow at a period in your life when you can least afford to pay the taxes and that is in retirement.
There are 3 Tax Buckets. Taxable, Tax-deferred and Tax-free. In this episode we discuss the tax-deferred bucket, or as I call it the "Ticking Tax Time Bomb." When you take money out of this bucket, you are subjected to pay a tax at whatever tax rates happen to be at that time. This creates Tax-Rate Risk, which can be mitigated.
There are 3 Tax Buckets. Taxable, Tax-deferred and Tax-free. In this episode we discuss the least efficient one...the taxable bucket. Every year as your money grows you have to pay a tax. Taxable buckets make for great emergency funds and there is an ideal amount of money you should have in these types of accounts, 6 months worth of living expenses.