In the wake of the fiscal cliff sage, I think a couple of things really stand out:
- The era of low taxes has come to an end.
- You need to take control of your personal finances.
I think we were all sold on the idea that if we contribute to our 401(k)
and traditional IRA and defer taxes until retirement that it was a great way to avoid paying taxes now under the assumption we would be in a lower tax bracket when we retired. With the financial mess this country is in, I think many of us might be in a higher tax bracket after we retire.
It may make sense to pay the taxes now and then invest in a vehicle that could return the investment results tax-free down the line. Roth IRAs
/401(k)s are certainly an option for most, and an investment grade life insurance policy that is properly structured could help many more.