You may be familiar with Roth IRAs—in fact, you may have them in your retirement portfolio. If so, you’re not alone. Roth IRAs are chosen by millions of investors for their at-retirement tax benefits.
Instead of a traditional IRA, which is taxed upon distribution during retirement, a Roth IRA is taxed during the contribution phase, and distributions during the retirement years are tax-free. This is a great step in the right direction.
But Roth IRAs still have many limitations. And like we always say, following the crowd doesn’t necessarily mean you’re following the best path.
If you were a farmer, would you rather pay taxes on the seed or the harvest? By choosing to pay a little on the seed now and have it over and done with, you can eliminate your risk of paying tax on the harvest, when taxes will most likely be higher.
While Roth IRA tax treatments are great, they come with two significant downsides.
1. Your Money At Risk in the Market: Often the money inside a ROTH is at risk in the stock market. Having your principal at risk is a mistake millions of Americans are making with their retirement nest eggs. A terrorist attack tomorrow could cause consumer confidence and fund values to plummet. Overnight your retirement dreams could become a nightmare, due to insufficient funds.
2. Too Many Strings Attached: Government-sponsored investments, such as Roth IRAs, come with strings attached. For example, with a Roth IRA, you’re limited on the amount of money that you can set aside for your retirement years. As of 2014, $5,500 ($6,500 ages 50 or older) is the maximum amount you can save per year. Many who are laser-focused on saving for retirement or have higher net-worth are frustrated by this limitation.
WHY LIMIT YOURSELF?
Wouldn’t you rather enjoy safety of principal, and be able to put away as much money as you’d like toward your retirement? A max-funded, tax-advantaged insurance contract doesn’t put your principal at risk in the stock market, although you can still benefit from market gains. And because these contracts are established with secure, time-tested insurance companies, rather than the government, they effectively cut the strings on maximum contribution limits. These contracts can be structured to hold as much money as the policy is designed and approved for. A contract can be structured to hold as much money as the policy is designed and approved to hold.
Click here to learn more about max-funded, tax-advantaged insurance contracts and why they have all the advantages of a Roth IRA and a whole lot more.
If you already have a Roth IRA, consider attending an event in order to get educated about choices that will empower you to a brighter retirement. There are financial possibilities that have the ability to make your unpredictable plan predictable. Click here to see our seminar schedule.
*Life insurance policies are not investments and, accordingly, should not be purchased as an investment.