Tag: IRA

4 IRA Mistakes That Could Destroy Your Savings

From Peter Reagan at Birch Gold Group

Once you receive a retirement plan distribution, then you have some planning to do.

One part of that planning is deciding how you are going to roll over the funds into any new vehicle(s) and begin to enjoy the fruits of your labors.

The IRS website nicely summarizes the main reason why many Americans who are saving for a stress-free retirement would do this:

When you roll over a retirement plan distribution, you generally don’t pay tax on it until you withdraw it from the new plan. By rolling over, you’re saving for your future and your money continues to grow tax-deferred.

If you don’t roll over your payment, it will be taxable (other than qualified Roth distributions and any amounts already taxed) and you may also be subject to additional tax unless you’re eligible for one of the exceptions to the 10% additional tax on early distributions.

Generally, it’s prudent to complete this process within 60 days in order to avoid any potential tax consequences or penalties. We’ll clarify that in just a second.

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What’s Happening to America’s Wealthiest Families Proves the Dollar Is Failing

Via Birch Gold Group

What Is Happening to Wealthiest American Families Proves the Dollar Is Failing

From Peter Reagan

There isn’t any doubt, when inflation accelerates like it is right now, the lower income class has their financial worlds turned upside down. After all, that’s what happens when most of the food that we eat and fuel we use every single day suddenly becomes 10% – 43% more expensive.

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How an IRA Could Help Boost Your Retirement Beyond Social Security

Via Birch Gold

How an IRA Could Help Boost Your Retirement Beyond Social Security

We’ve reported many reasons why you should not rely solely on Social Security to fund your golden years.

Those reasons are in addition to the official advice that Social Security is only designed to replace about 40 percent of your pre-retirement income. Which naturally might get a retirement saver to think: “What about the other 60 percent?”

Enter the Individual Retirement Account, or IRA

According to Investopedia, an IRA is “a tax-advantaged account that individuals use to save and invest for retirement. The Internal Revenue Service (IRS) also uses the term individual retirement arrangements.”

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THIS DAY IN HISTORY – Bloody Sunday in Northern Ireland – 1972

Via History.com

In Londonderry, Northern Ireland, 13 unarmed civil rights demonstrators are shot dead by British Army paratroopers in an event that becomes known as “Bloody Sunday.” The protesters, all Northern Catholics, were marching in protest of the British policy of internment of suspected Irish nationalists. British authorities had ordered the march banned, and sent troops to confront the demonstrators when it went ahead. The soldiers fired indiscriminately into the crowd of protesters, killing 13 and wounding 17.

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Here’s Why (And How) The Government Will “Borrow” Your Retirement Savings

Submitted by Simon Black via SovereignMan.com

Confiscation

According to financial research firm ICI, total retirement assets in the Land of the Free now exceed $23 trillion.

$7.3 trillion of that is held in Individual Retirement Accounts (IRAs).

That’s an appetizing figure, especially for a government that just passed $19 trillion in debt and is in pressing need of new funding sources.

Even when you account for all federal assets (like national parks and aircraft carriers), the government’s “net financial position” according to its own accounting is negative $17.7 trillion.
And that number doesn’t include unfunded Social Security entitlements, which the government estimates is another $42 trillion.

The US national debt has increased by roughly $1 trillion annually over the past several years.

The Federal Reserve has conjured an astonishing amount of money out of thin air in order to buy a big chunk of that debt.

But even the Fed has limitations. According to its own weekly financial statement, the Fed’s solvency is at precariously low levels (with a capital base of just 0.8% of assets).

And on a mark-to-market basis, the Fed is already insolvent. So it’s foolish to think they can continue to print money forever and bail out the government without consequence.

The Chinese (and other foreigners) own a big slice of US debt as well.

But it’s just as foolish to expect them to continue bailing out America, especially when they have such large economic problems at home.

US taxpayers own the largest share of the debt, mostly through various trust funds of Social Security and Medicare.

But again, given the $42 trillion funding gap in these programs, it’s mathematically impossible for Social Security to continue funding the national debt.

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A Sneaky Way to Grab Your Retirement Savings

Guest Post by Mark Nestmann

With an $18 trillion debt and $97 trillion or so in unfunded liabilities, Uncle Sam is anything but flush with money. So Congress and President Obama are looking for ways to stem the flow of red ink. And your retirement or pension plan is square in their sights.

No, Congress isn’t going to confiscate your IRA or 401(k) retirement plan, although there are lots of people marketing various products and services that want you to believe that. Sensationalism sells, after all.

But as I discussed in this essay, confiscation isn’t politically feasible. Look at the numbers. More than 60 million Americans have IRAs or 401(k)s, holding nearly $6 trillion parked away for retirement. Sure, the Feds would love to get their hands on these assets. But any politician who openly advocated confiscation would face near-instant impeachment.

Instead, Congress will whittle around the edges of the Tax Code to raise some additional revenue. President Obama even wants to end tax-deductible contributions to IRAs and other pension plans once their combined account balances exceed $3.4 million. And since we’re now dealing with the “rich,” no real political obstacles to changing the rules exist.

The biggest objection that the tax-and-spenders have is that Americans in higher tax brackets get a bigger tax benefit for retirement plan contributions than anyone else. Someone in the 39.6% tax bracket saves almost $40 in income tax for each $100 contributed to a retirement plan. In contrast, someone in the 15% tax bracket only saves $15.

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MOST BOOMERS ARE UP SH*T’S CREEK WITHOUT A PADDLE

The average retirement balance of all workers is $77,000. The median is much lower, as the highly paid employees have large balances. This is pitiful enough, but looking at the balances for 55 to 64 year olds is frightening. The chart below captures a future of cat food and Oodles of Noodles for millions of Boomers. No wonder they will never vote to reduce entitlements. There really is no excuse for this pitiful level of savings at their age. A 60 year old was born in 1953. They turned 27 years old in 1980 at the outset of a 20 year bull market. Anyone who contributed regularly to a 401k from 1980 until today should have hundreds of thousands accumulated. Instead you have 60% of all 55 to 64 year olds with less than $72,000 of retirement savings.

These people have a life expectancy of 20 years and many will only get $15,000 to $20,000 per year from Social Security, with increases that will be less than the true inflation rate. Meanwhile, their real estate taxes, food costs, energy costs, and health care costs go up by 5% per year or more. They can earn about $600 of interest per year on a $120,000 retirement account balance. They can’t expect more than 3% real annual stock market gains over the next ten years, with a couple of plunges mixed in for good measure.

I hope Boomers weren’t counting on the idyllic retirement they see on those Wall Street banker commercials. The only ones having an idyllic retirement are the bankers.

 

MY CAT SEEMS TO LIKE IT. MAYBE BOOMERS WILL LIKE IT TOO