Traditional Retirement Policies Aren’t Water-Tight
Up the canyon in Ogden, Utah is a beautiful lake called Pineview Reservoir. One of our family’s favorite activities during the summer is to take the boat up in the evening for fun-filled activities like wakeboarding, tubing, and fishing. This has created some great family memories and has also created some moments of “Oh no! Now what?”
In order for a boat to float, it’s imperative you do not allow water to get inside of it, which seems easy in concept. Last summer, my wife, four kids, and I launched our boat into the lake. I didn’t notice until we got into the middle of the lake that the engine was struggling and we seemed to be carrying a lot of weight. I opened the engine compartment only to find some moron (a.k.a. Me) forgot to insert the drain plug before we launched and we were filling up with water. Without any of us realizing it, our supposed relaxing evening turned into a stressful frenzy.
I tell this story to relate it to the current retirement system. Many people are casually pulling their retirement accounts up the mountain in hopes of relaxing on the lake of retirement during the evenings of their lives. Unfortunately, many people reach the middle of the lake only to realize they’re taking on financial water and sinking.
Traditional retirement policies are proving to fail and, due to massive government debt, some of the advantages people think they’re getting could go away. The Employee Benefit Research Institute has stated that retirement policies could change “quite radically” due to a new Congress and President’s agenda.
The two reasons stated are
1) A U.S. tax structure overhaul and federal budget “could fundamentally change how private sector retirement plans are treated in the tax code.”
2) “As one of the top sources of revenue foregone by the federal government, ending or reducing current tax breaks for employment-based retirement plans (particularly 401(k)s) would free up revenue for other things the new Congress and president want to do.”
One of the disadvantages of participating in a government qualified plan like a 401(k), 403(b) or IRA is their ability to pull the drain plugs at any point. I was able to race my boat and family back to the shore and pull it out of the water before it sunk. Are you going to be able to do the same with your retirement?
Qualified government plans are not the way to prepare for retirement. By following some basic financial principles and using the Perpetual Wealth Strategy™, you can create a retirement that is as picturesque as a blue lake in the top of the Rocky Mountains.
At Paradigm Life we can customize a policy to fit your financial situation. Our expert Wealth Strategists are available to answer your questions and show you customized illustrations, outlining an individual plan of action to help you achieve your goals.