Two secrets the IRS and Wall Street don’t want you to know
By Jeffrey Reeves MA
For the past 40 years, Washington and Wall Street have used Madison Avenue advertising to mislead America into believing that there are no alternatives. However, a Wall Street Journal article described this savings vehicle — one of the oldest, most respected, and most reliable financial tools American families can buy — as the Swiss Army knife of financial tools.
Every year, Americans are bombarded with incentives to borrow money from the IRS. Do you question that?
Secret No. 1: Well, here's the simple truth. When you take a deduction for an IRA, 401(k) or any tax deductible retirement account, you are not saving money on taxes. You are borrowing the money you don't pay in taxes this year from the IRS, and your future retirement income is your collateral.
You will have to pay tax on that money at some time and you will not have anything to say about the tax rate the IRS lays on you at a later date. Here's a story to clarify:
A family owned some land and wanted to plant an apple orchard. Their friendly IRS agent showed up one day and said, "Have I got a deal for you? You can buy your seeds to start your orchard and I'll give you a tax deduction for the cost. This will make it easier for you to start your orchard. Then," the friendly IRS agent continues, "I won't bother you till you start harvesting apples in about 20 years. Then I will tax you in the money you earn selling your apples, not just once, but every year until you die or run out of apples."
When the family asked the friendly IRS agent what the tax rate might be in 20 years, he replied, "I don't know right now, but you can be sure the IRS will take care of that."
Is that a good deal? You decide. It's the same deal you get when you take a tax deduction for a retirement account contribution. You defer the taxes and the tax rate. Like the snickering mechanic in the oil change commercial taught Americans, "You can pay me now, or pay me a whole lot more later."
You deserve better. You decide.
Secret No. 2: Now that you know that dirty little secret, imagine if instead of mortgaging your retirement to the IRS, you could put your hard earned dollars in savings plans that guarantee annual growth — that's right, guarantee. Savings plans that give you ownership of the company selling them; savings plans that allow you to take tax-free retirement income; savings plans that give you complete access to, use of, and control of the money you save — no government, employer, bank or investment company involvement.
For the past 40 years, Washington and Wall Street have used Madison Avenue advertising to mislead America into believing that such a savings plan doesn't exist. However, a Wall Street Journal article described this savings vehicle — one of the oldest, most respected, and most reliable financial tools American families can buy — as the Swiss Army knife of financial tools.
"What is that financial tool?" you ask.
The answer is participating whole life insurance. It delivers on its promises with uncompromising integrity and has done that for the past 150 years.
If you remember only one thing from this article, remember that.