“You got to defer taxes for all those years you contributed and until you retire. Usually you are in a lower tax bracket after retirement when you start paying taxes on your withdrawals.”
1. You get no tax breaks you would ordinarily get: capital gains, depreciation, etc.. And turns it all into ordinary income that is taxed at the highest rates when you withdraw it, instead of at the lowest tax rates.
2. You face government control and limits as to what investments you are allowed to choose, when you have access to your own money, penalties for withdraw, etc.
3. The government is your partner and shares your gains.
4. The balance is not yours. Part of it belongs to the government.
5. You have to plan on being poorer in retirement to be in a lower tax bracket.
That’s a start on listing why an IRA is a bad deal.
Yes, those are fair points. That’s why the bulk of my assets are not in retirement accounts and I don’t need them to live on now.
But they are a useful tool if you only make small withdrawals and then leave them to your heirs tax-free. I only made contributions on my highest tax years so I’m coming out ahead on my retirement accounts. I’m not in the 39% bracket any more.
You can do the same with real estate, at least for now.
Roll your IRA over into bank stock, or some kind of stock where it might earn dividends. IRAs just don’t gain much. Our best retirement earnings have been Wal-Mart stock. We sometimes sell off a partial amount so the tax won’t eat us alive.
Roll your IRA over into bank stock, or some kind of stock where it might earn dividends. IRAs just don’t gain much. Our best retirement earnings have been Wal-Mart stock. We sometimes sell off a partial amount so the tax won’t eat us alive.