Paying taxes feels like an endless game. And guess what? It is. The more money you earn, the more the government takes away from you in taxes! In fiscal year 2015-16, federal, state, and local governments are expected to collect a combined $6.6 trillion. The federal government alone will take more than half of that. Oh, and to put it in perspective, all of these taxes work out to fully one-third of the nation’s Gross Domestic Product!
Wouldn’t it be nice to be able to shelter your hard-earned income from the government? Well, the reality is you can do it if you know how, and more significantly, it can be done legally. The solution is whole life insurance. If you’re scratching your head right now about how life insurance can possibly help you, you’re not alone. In this post, we’re going to make the case for why whole life insurance is the key to protecting your money from the federal government.
Follow These Steps
- The federal government is never going to give you a tax break: Let’s face it; you’re going to work hard for several decades and probably double or triple your annual income in your lifetime – but every year, the government is just going to take, take, take. The nation’s progressive tax system ensures that the more taxable income you earn, the higher your effective tax rate.
- You’ll still be taxed post-retirement: Most Americans today are putting a big chunk of their retirement savings into the ubiquitous 401(k) savings account. It feels good to not pay taxes on the income you’re deferring into your retirement plan. But the government still is going to take its share of this money; you’re just deferring paying taxes on this income until you withdraw it. Presumably you’ll be in a lower tax bracket in your retirement years than when you were working, but you’ll also be living on a fixed income by then.
- The key is keep your assets private: The best way to (legally!) prevent your financial assets from being taxed is to find a way to enter into a private contract between you and a mutually owned insurance company. The government cannot tax you in this situation because the government cannot interfere with a private contract.
- Whole life insurance acts as a tax shelter: When you structure a whole life insurance policy correctly, the money you invest in the policy is not taxed because your policy grows tax-free. You can even receive retirement disbursements without penalty or tax. And although a whole life insurance has a cash value, you are not required to report it when you’re filing your taxes. At the same time, you can access the cash value by borrowing against it, allowing you to fund other aspects of your life.
Whole life insurance is a game changer because it’s the best way to shelter your financial assets from being taxed. The reason it’s so powerful is because of the reality of how the tax system is structured: You’re never going to get a break on your income taxes, and you’ll still be taxed even after you retire. Thus, the key is to use whole life insurance to keep your assets private and out of Uncle Sam’s hands.
If you want to learn more about protecting your retirement income, read Access Your Savings Tax Free.