Qualified Retirement Plan Risks

Over funding your qualified retirement plan could put your retirement at serious risk. Not only do you have to consider Market Risk, but the Tax Risk alone could be detrimental to your money when you need it the most. 

Supplementing your retirement savings with a Tax-Free Retirement vehicle is a wealth principle most underutilized in middle class America today. 

Contact an advisor at Family First Life to schedule a consultation. Asset Protection, Wealth Preservation & Wealth Accumulation

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Smoking Will Cost You 6+ Million Dollars!

Last week I took my daughter to the mall. While walking in, she saw someone she knew from school and he was smoking. My daughter said, "Dad, that's gross!". I then replied, "That will probably cost him over a million dollars, too!". Today I wanted to run an Indexed Universal Life (IUL) Illustration just to see what this seemingly small amount of money each day would really cost a person in lost potential income gains.


The boy we saw was 16 years of age. If you use a cost per pack of cigarettes of $7.50 and assume a pack-a-day habit, you will spend $2,737.50 in one year or $228.12 per month on your habit.   If you were to invest $228.12 per month into an IUL from age 16 to age 65, you would be able to draw $183,766 per year, TAX-FREE, from age 65 to age 100! All of this without your money being at risk, like a 401K or IRA and then having to pay the IRS tax on your money. This investment also provides your loved ones with a TAX-FREE death benefit!


The assumptions used in this Illustration, are as follows:

• 20 Year Backcast of the S&P 500 with an average rate of return of 8.10%.
• Top 5 of the 7 Indexing Strategies used to provide diversification.
• Increasing Death Benefit Option used to Age 65 and Level from 65 to 100.
• Minimum Death benefit selected to increase cash accumulation.
• Premiums stop at age 65, as account will be fully funded.
• Withdrawls taken from age 65 to 100.

Illustration

This is a perfect example of how small, consistent actions can compound into something huge over time! Insurance companies don't advertise anything flashy, but what they offer are risk averse products that consistently perform, year after year.



Michael Pfeil

Family First Life
mpfeil@FamilyFirstLifeMD.com

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Do You Want To Pay Taxes On The Seed or The Harvest

Uncle Sam loves Qualified plans.  He basically has your retirement money mortgaged and holds a lien against it with a tax liability.

Here is the main issue with Qualified Retirement Plans that no one talks about:

With a Traditional IRA or 401K, you are simply deferring taxes to an unknown amount on the entire growth of your account.

If you are at a 33% tax rate and put $6,000 (the seed) into an IRA/401K, you would have received a $2,000 deduction.  However, if that account were to grow to $100,000 (the harvest), you will now have a $33,000 tax liability.

You have basically traded a $2,000 deduction, today, and converted it to a $33,000 tax liability, tomorrow.

Contact Family First Life of Maryland to meet with an advisor to discuss a Tax-Free Retirement option!

Michael E. Pfeil

Family First Life of Maryland

www.FamilyFirstLifeMD.com

mpfeil@familyfirstlifemd.com

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