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$18 Trillion (That’s Trillion with a T!)

debtclock18Last week while we were all feeding our faces like gluttons over the Thanksgiving Holiday our government’s gluttonous spending reached a new milestone: our National Debt hit $18 Trillion.  That’s Trillion with a T! If you like to see zeros it looks like this: 18,000,000,000,000.

I don’t want to get too political and I certainly don’t want to be partisan. There’s more than enough blame to go around. In my opinion neither the Democrats nor the Republicans do a good job at fiscal responsibility. They all spend in a way that none of us as individuals can. Even State and Local governments can’t get away spending the way the Federal Government can. This is uniquely a Washington Disease.

I’m going to suggest that long term this level of debt is unsustainable and a very likely measure taken to reduce the National Debt is going to be higher federal income tax rates.

What would happen to your retirement savings if our statutory income tax rates were to increase substantially? If you are putting money in a Qualified (to pay taxes later) Plan through your employer like a 401(k) or IRA it means the amount of money you actually have available to use, net of taxes just took a big cut.

I have been showing my clients another way to save for retirement that leverages one of the best “loopholes” in the tax code: the income tax-free status of life insurance death benefit proceeds. We use a special type of insurance called Indexed Universal Life that can be designed in a way that lets people safely create an income tax-free cash flow for life they can use while they are alive. Here’s a brief video I put together that explains how it works: VIDEO

Sure, none of us know what the future will bring as it relates to taxes, but wouldn’t you sleep better knowing at least a portion of your retirement savings is in a place that is protected from future tax increases?

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