In this episode, we question the notion that you save money using tax-deferred programs. Typically, this is sold through funding your IRA or your 401K. We'll also clarify what we believe a real tax-savings is.
~ Show notes and resources from this episode can be found here:
We hear a lot from our clients come this time of the year saying, "Hey, I normally fund my IRA or my 401K because my tax bill is so high. The common thought is that you will save money on taxes by funding them.
But we have a beef with this. It doesn't actually save money on taxes. It's a smoking mirrors type of thing.
What people don't really understand is that on these deferred programs you're not actually saving any money on taxes. They're not called the tax savings programs. However, they are called tax-deferred programs.
We discuss in more detail in this episode...
~ The Tax-Saving Hoax of Tax-Deferred Programs Topics Discussed: ~
* Doing the math
* Tax-savings vs. tax-deferred
* The long-term outlook on tax rates
* IRAs and 401Ks
* The impact of inflation
* Opportunity costs
* Leveraging whole life insurance policies
Episode Takeaways:
"When you put money into the tax-deferred program, you truly are eroding your wealth due to the time and inflation."
"Every time you put money where you can't touch it, you're automatically guaranteeing the dollars that come back are weaker."
"looking to reduce, not defer, but reduce taxes is to think how you can serve people and start a business."