...before I was just concerned, by the way. I was in Atlanta at our corporate office for a quarterly advisor's meeting and we had a guest speaker who discussed at length the current state of the US Government including the proposed budget and what the guesstimated future income taxes were going to look like. Here are the highlights of what I took away:
· 2010 Income taxes collected $1.4 TRILLION...estimated in 2016 to be $2.7 TRILLION...that's close to doubling by the way. (usgovernmentrevenue.com)
· 2010 Federal Debt = $13.5 TRILLION...estimated in 2016 to be $20.8 TRILLION (usgovernmentrevenue.com)
· Amount of available currency in the US...1000 days ago - $829 BILLION...today $1.5 TRILLION. (US Treasury)
· Interest on the Federal Debt as of today = growing at a rate of $52,000,000 an hour, or $866,666 per minute...JUST THE INTEREST!! (usgovernmentrevenue.com)
· Current Federal spending of new dollars = $2 BILLION/hr. (usgovernmentrevenue.com)
· Current National unemployment is 9.1% (as of 5/2011). The current healthcare reform bill factors in a 4.51% unemployment rate. (healthreform.gov)
· Number of government employees making over $150,000 1000 days ago = 7,464...today = 82,034 (usgovernmentrevenue.com)
· In the last 10 years the value of the US dollar has decreased by 40%. (Reuters)
· Inflation has stayed stable around the historical average of 3%, but it doesn't include food and gasoline...which are the two major items in my life that seemingly cost more every year. (inflation. us)
· Current Governmental unfunded liabilities (A.K.A. Accounts Payable), such as pension & healthcare benefits for government employees, civil servants, and military personnel, and also including Social Security & Medicare benefits currently totals $62 TRILLION...equal to $534,000 per household. (USA Today)
So if I read this right, and with an abundant amount of logic and controlled emotion, we're pretty much screwed. I do not have a political bias in these numbers...unfortunately, they are what they are...and it's apparent that we are going to be paying for it for many generations to come...and that taxes have got to go one way...UP! So given these facts, and knowing that tax brackets are probably as low as they will ever be going forward...what strategies are available? It's not the paying of taxes that bothers me so much, but the thought of my assets being held for future confiscation by the constantly changing minds on Capitol Hill.
Traditional financial planning says defer as much of your income today as possible to save income taxes. Tax deferred retirement plans like 401(k) & IRAs only complicate the problem as what's the point of taking a deduction at today's bracket & throwing those dollars way into the future when I might be paying double what I could have paid today in taxes. Not to mention that the market isn't giving me my 15% returns like the "financial entertainers" keep promising. If my home mortgage deduction is one of the few I still have, why is paying off my home earlier a benefit? Especially given that it is still 20% below its appraised value in 2008.
Hopefully you're as scared as I am...Lord knows I don't like feeling alone with thoughts like these. Maybe you're intrigued as to what strategies are still available. Here's a key point...all of the bullet points were based on Economics...not finances. You might think you can control finances...but you cannot control economics. Traditional financial planning doesn't help you when faced with these issues. Economic planning does.
What a radical concept: Economic Planning. Economic Planning is taking hard cold facts and realities to help you truly understand the minefield of financial traps & pitfalls that you will be facing everyday for the remainder of your life. It takes into consideration the abundant amount of misinformation and myths you are constantly subjected to by the media, financial institutions, cable channels & websites. It addresses your fears about taxes, risk, inflation, the value of the US dollar, and penalties. It answers those questions that won't go away...the ones that "keep you up at night".
Show this to your CPA or "Your guy" that you work with ...see what they say about all of this. Post it to the world & see what they think. I'm curious to know if I'm the only one that is reading these facts correctly. Did you notice how many times I said the word TRILLION in the bullet points? Just in case you're interested, that's $1000000000000. Do I have your attention yet?
