By Bruce Weide
WHAT ARE THE TWO MOST SEVERE AND UNFORESEEN RISKS TO BABY BOOMER AND GENX'er RETIREMENT PLANS?
-
Retirees will pay far too much tax when they retire. This is because so many retirement plans are built upon the assumption the taxes will go down as we get older. But with the pending bankruptcy of Social Security and an ever increasing national debt now in the trillions of dollars, there is very good reason to believe taxes may actually go up severely when Baby Boomers retire, not down.
They are ignoring the great possibility of the BIG stock market crash, predicted sometime into the next decade, by people like Robert Kiyosaki (Rich Dad, Poor Dad books) and even stock market bulls like Harry Dent, (The Roaring 2000's Investor). This could cause millions of Americans to radically change their retirement plans, being forced to continue working just at the moment in their life they thought they would be free to retire.
As a Retirement Planner in the State of California a formidable amount of training and continuing education is required. I don't say that so much to impress you - you can view a current list of my training at the California Department of Insurance Website and evaluate that for yourself.
But with that educational background, what I find troubling is that when I speak with small business owners, I find that very few if any have been using the more state-of-the-art retirement planning strategies that are available specifically to business owners � strategies that individuals can not even take advantage of unless they own a business or are otherwise a key executive in a business.
This very failure is laying almost an entire generation susceptible to several great retirement risks, two of which are listed above:
Don't get me wrong, I believe that the investment markets still have many great years left to deliver! My point is that the vast majority small business owners and key executives are at risk because they have been advised in only one narrow strategic direction in their retirement plans - 1.) Let all your retirement income be taxed upon withdrawal, and 2.) Pray that the stock market doesn't crash right before you're ready to retire.
No one can know for sure what the investment environment or the tax environment will be for the next 20 years. But there are critical ways to prepare for the good or the bad; and the only catastrophe would be to not prepare at all.
Our company provides the most advanced wealth planning strategies for comprehensive tax, retirement, investment, estate, business, insurance, and overall wealth protection needs.
We focus on several alternative approaches for the small business owner - approaches that most financial advisors target for only the seven-figure Board of Director types, and thereby leaving small business generally ignored in the scheme of things. These approaches, where feasible, will stress:
-
TAX-EXEMPT income at retirement.
-
Safety triggers which can provide stock market-like gains in the good years, and prevent losses in the bad years.
-
Maximum reduction in today's taxes for the business owner and key executives, where feasible.
-
Reduction or elimination of any caps on contributions, which can prevent highly compensated individuals from being able to save enough to perpetuate their current lifestyle after retirement.
Small business owners take tremendous personal risks to provide a livelihood for themselves and their employees. OUR PURPOSE is the help them do so in an environment just a little freer from taxes and freer from investment risk in their Golden Years.
ON TAXES
"The legal right of a taxpayer to decrease the amount of what otherwise would be his taxes, or altogether avoid them, by means which the law permits, cannot be doubted."
Mr. Justice Sutherland
in the United States Supreme Court case of
Gregory vs. Helvering, 293 US 465 (1935), page 469
"Two weeks of solid work on his estate may be worth more to an executive than his financial gains of the past ten to fifteen years."
Joseph D. Coughlan, "Executive Blindspot,"
Price Waterhouse Review
Autumn 1966, pages 38-39
"If Patrick Henry thought that taxation without representation was bad, he should see how bad it is with representation."
The Old Farmer's Almanac
ON BUSINESS
"As a teacher, advisor and consultant to many closely held businesses, I am convinced that the privately held company is an endangered species. The threat lies not so much from competition, regulatory legislation, consumer movement or other outside forces. The real threat to the private business lies primarily with the business practices and policies of its owners."
Leon A. Danco
Beyond Survival�A Business Owner's Guide for Success
Cleveland: The University Press
1975, pages 4-5
ON RETIREMENT
"Keep in mind, Social Security benefits are not intended to meet all your financial needs. For example, when you retire, you'll probably need other income, such as savings or a pension."
Shriley S. Chater
Commissioner of Social Security
In a letter addressed to individuals who are (or soon will be) age 60
November 27, 1996