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The Tax Train Is Coming – Is Your Retirement Prepared?

take control of your retirement, rising taxes

TAX ALERT! As we think about the times we are currently living in, with inflation happening at a rapid speed and the federal debt climbing, everyone needs to know one thing for sure…our taxes are going to rise drastically. Knowing this, we also need to do something now to prepare ourselves for a retirement where we pay little to no taxes on the money we save for the future.

In the documentary called “The Power of Zero: The Tax Train Is Coming,” Director Doug Orchard travels the country to talk to many experts about the rising federal debt, which is setting the stage for a massive tax increase. This increase is expected to happen within our lifetime.

Hear from former Comptroller General of the U.S., David Walker, Insurance Expert, Van Mueller, Honorable Tom McClintock, IRA Expert Ed Slott, and the notable Laurence J. Kotlikoff, Professor of Economics, Boston University explain our unsustainable economic situation, and how it affects you in your day-to-day ability to provide for your family.

Let’s Talk Debt

At this point and time, our debt is growing faster than the economy. By the end of 2021, our national debt will be $28.43 trillion. This is a huge number!! In order to pay this debt off, our government needs to take a serious look at our spending and cut costs. However, that won’t be the only thing that needs to happen to reduce this number, the other major thing that will happen is our taxes are going to have to rise. And not just by a little bit. Taxes are going to have to double!!

If the debt of our country is not taken care of, it can paralyze every avenue of our country. Not only that, our national debt is the single biggest threat to our national security.

Let’s Talk Social Security, Medicare & Medicaid

We have all heard that Social Security is going to run out of money. That is not a lie. With 70% of baby boomers expected to retire between 2022 and 2029, it is just going to make that money run out faster. In fact, it is expected to hit a wall in the early 2030s. With that, Medicare is expected to hit a wall in the late 2020s.

Healthcare costs are a serious problem in this country. For patients on Medicare and Medicaid, the amount a hospital gets for them versus a patient from a commercial sector is vastly different. The example given in “The Power of Zero” is this:

  • For every $1 that is billed, an average hospital needs $0.22 to break even.
  • From commercial insurance they get about $0.50 to $0.60.
  • While from Medicare they get $0.18 and $0.12 from Medicaid.

With this discrepancy in costs, the additional costs then shift to the private payers.

Let’s Talk about Retirement

Now, onto one of the most important topics of the whole documentary, protecting your retirement money. As you can tell from what you previously read, you need to be prepared to rely on your own money for retirement and not the government for assistance. Along with that, taxes going up will affect your retirement in a large way. Because of this, you may need to adjust how you save for retirement.


Mentioned in “The Power of Zero,” there are three buckets you want to have:

Bucket One: Taxable

Within this bucket every year as your money grows, you pay a tax. Within this bucket could be stocks, bonds, mutual funds, CD, money markets, to name a few. There can be too much money in this bucket from a tax efficiency standpoint, but also too little from an emergency fund standpoint. The amount you want in this bucket is just the right amount, which should be about 6 months’ worth of basic expenses.

Bucket Two: Tax Deferred

Within this bucket, you will pay for taxes at the time of withdrawal. The accounts that fall under this bucket are 401Ks, IRAs, 457s, and Sep Simples. What you need to ask yourself is, “What tax rate will I be in when I take the money?” With this, you need to remember what we said above taxes rising, and with that you don’t want to have your retirement money in taxable vehicles when that happens.

Bucket Three: Tax-Free Bucket

To fall in this bucket, the accounts need to be truly tax-free. This means free from federal tax, state tax, and free from capital gains tax. Along with that also no social security tax. What this means is, it should not count as provisional income. There are two accounts that fall under this: Roth IRA and Permanent Life Insurance.

It’s in your best interest to convert your 401Ks and IRAs to a Roth IRA, you will need to pay taxes to do the transfer, but this is in your best interest because Roth IRAs are truly tax-free.

With some Permanent Life Insurances, you have the ability to take that money out during your retirement tax-free.

In the end, the only way to protect yourself during retirement from rising tax costs is to get as much as you can to bucket number three where you have to pay $0 in taxes. Now is the time to start repositioning dollars from tax-deferred to tax-free. Do it today before tax rates start to rise!

To learn more about this, contact me today. I would love to be able to share this great documentary with you as well as help you get prepared for a tax-free retirement!

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