I’ve been preaching for many years how income taxes are
going to increase for everyone at some point. How can they
not? We’re $22 TRILLION in debt (adding to that debt every
year despite a booming economy), Socia Security, Medicare
and Medicaid are a mess, etc.
But… even if taxes do NOT go up for the nation as a whole,
your taxes will likely go up when the inevitable happens!
If there is a possibility that you or your spouse will pass away
in the next 20 years, your tax rate is going to double no matter
what.
Here are the statistics. Seventy percent of all married women
will become a widow. More than a million women become
new widows each year. Of course, some men will become widowers
too, like my Dad.
Here’s the key point!
When you file as a single taxpayer, you hit each subsequent
tax bracket twice as soon. If you are living on the more or less
the same amount of money as you were when you were married,
you could find yourself with a marginal tax rate that has doubled.
Plus, being single will cause more of your Social Security to
be taxable. That’s what happened to my Dad when my Mom
passed a few years ago.
The “Get me to ZERO” principles can help protect you from
more than just the risks associated with the country becoming
insolvent.
Systemically repositioning money from tax-deferred to tax-free
allows you to avoid this scenario, and pay tax rates that are still
historically low.
It not only allows you to take out your money down the road tax-free,
if it goes to your heirs they also get to receive it tax free, at a time
where tax rates will likely be much higher and they can least afford
to pay them.
Shifting money to tax-free doesn’t just benefit you, it can also
benefit the people that will spend your money after your death.
You don’t want to scrimp and save your whole life only to give up
to 40% of your money to the IRS.
If you’re in the slow-go years or the no-go years you’re likely in
a low tax bracket. So, it makes sense to figure out what your
current tax bracket is right now, and compare that to what your
children would pay if they were to inherit your tax-deferred assets.
If you’re in the 22% tax bracket it makes sense to look at what
the 24% tax bracket can do for you in terms of your ability to shift
money to tax-free.
So, even if tax rates don’t double to keep the country solvent, they
can still double for you. If that happens, it will be too late to do the
Roth Conversion because the conversion will be done at the
doubled tax rate.
We are at historically low tax rates, especially for married people,
so take advantage of them while you still can.
You can learn more about ROTH conversions and a lot more
in my “GET Me to ZERO” book which you can order from
Amazon by CLICKING HERE.
all the best… Mark