Recognizing Dangers

There are three main dangers creating the risk you will outlive your money.

Knowing the impact of these dangers is vital to understanding how to build a strong and reliable foundation.


Did you know that taxes are at an all-time low? Where will taxes be when you retire? You’re encouraged to put money into an IRA or 401(k) because “You’ll be in a lower tax bracket when you retire.” Will you really? Are tax rates likely to drop when they’re already at an all-time low? These plans were created in the 1970s when tax rates were as high as 70%. Remember: the money in your 401(k) or pension is not all yours: don’t forget about your business partner, Uncle Sam!! To net $100,000, you’ll need to pull out $150,000 so you can send $50,000 (one-third of your money!!) in taxes to Uncle Sam and your friendly state!


Inflation affects everyone and will double the cost of living in under 5 years. That means, the dollars you have now will be worth less in the future. Inflation happens when the government prints money to deal with its rising national debt and underfunded obligations such as Social Security. The growth on your 401(k) or IRA is not predictable and will not keep up with or outpace inflation, and you could be in danger of outliving your money.


Did you know that your 401(k) or IRA can LOSE money? What’s good about that?!! Would you leave money in your bank savings account if the bank couldn’t promise that it would still be there next month? Of course not! Most Americans lost as much as 40% of the value in their IRAs and 401(k)s from 2000–2003. It took four more years (until 2007) just to recoup what they lost.


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