“And don’t get a Roth IRA, where you pay taxes going in, even if your tax bracket is low.”
My mom is a CPA and claims the Roth is the biggest government scam she can remember. Her logic is as follows:
1 - A bunch of dummies converted IRA to Roth IRA and incurred a huge tax burden, boosting the overall government revenue.
2 - The gov’t never leaves rules alone and she believes they will means test the “tax free” part on the backend.
3 - MOST IMPORTANT. Most people have a much higher tax bracket during their savings years than during their retirement. So, you being taxed more now on your principal (Roth) than you would be later on your compound interest (normal IRA). The overall power of the extra principal wields it’s mathematical edge very quickly for normal IRAs.
I have always been leery of Government Approved/Sponsored Tax Savings plans for Financial Investing. What can be given can be whisked away with the stroke of a Pen.
I believe it has some special advantages, but I can't remember what these are, since they didn't apply to me.
This fundemental truth about government is why if you are even counting on retiring you're crazy.
With the 50% hit the "buy and holders" took in the stock market. They are going to have to wait 10+ years, after the market turns bullish just to get back to even. When that happens is anybody's guess. My prediction will be that it will be slow growth going forward and with the boomers needing more and more money now that decent paying jobs are becoming more scarce, I would be surprised if the stock market can do better than a 6% annual return when things do turn around.
What makes you think the feds are going to let you keep your IRA/401k? It is all ill-gotten gains at the expense of other people and sheltered from taxes to boot. You deserve something more than the next guy because you were lucky and your portfolio didn't lose as much money as some other poor citizen who got taken in by Madoff? We are all subjects of the federal government and subject to a set of arbitrary laws that can be changed at any time. If you didn't realize that just from the tax code of the last 60+ years then you have been delusional just like me.
Think about it why do you even need an IRA and 401k? Because the feds have arbitrarily set tax rates too high and you can't save for your own retirement. They are currently proving they don't even have a need for collecting taxes in the first place. They print the money and can do so when ever they choose. Why do they need to take even more from us?