“RAFT” – Retirement Approach Free of Tax
A Safer Retirement Solution
While traditional, tax-deductible retirement vehicles such as 401(k)s and IRAs may be the right choice for some, relying solely on these accounts could put you at greater risk for paying high income taxes in your retirement years.
If you contribute $15,000 annually to your tax-deductible account, and you are in a 20% tax bracket, you will have a tax savings of $3,000. Assuming a consistent deposit of $15,000 over a period of 25 years, at a growth rate of 8%, you would have a value of $1,200,000. Assuming you take $60,000 (5%) out for income annually upon retirement, and you are in a tax bracket of 30%– you now owe $18,000 in taxes. So, you took a tax deduction of $15,000 during your working years, but it cost you $18,000 in taxes during your retirement years, when you needed as much spendable income as possible.
Did you really save by deferring your taxes? Or did you just procrastinate and end up paying a higher rate later on? The growing national debt, unfunded Social Security and Medicare liabilities, and an increase in other entitlement programs are all signs that tax rates are bound to increase in the foreseeable future. Don’t procrastinate your taxes and end up paying a higher rate later; put your money into a tax-free account.
How Does The RAFT Strategy Work?
There are three ways to gain tax-free income: Municipal Bonds, Roth IRAs, and Tax-Free Insurance Contracts.
Municipal bonds are most appropriate for those in the highest tax brackets. Typically the gains on these types of investments are lower than most investors need for their portfolios. Roth IRAs can be a great retirement option for tax-free income, but there are limits on contributions and regulations on distributions. Also, the IRS restricts how much you can contribute annually and requires earned income in order to make a contribution (unless you are an unemployed spouse). Regular distributions may also be penalized before age 59 ½.
The RAFT Strategy (which utilizes equity-indexed insurance programs) provides minimal contribution limits and has two options for investing. The investor can choose annually either the fixed interest rate option or follow a specific index, such as the S&P 500. When the investor chooses to follow an index, their account will participate in a percentage of the gains of that index, yet when the index falls, the investor will not lose based on negative markets.
The way to generate tax-free income from these programs is to obtain an interest-free loan from your contract. You will not pay income tax on the money borrowed and you will not have to pay back the loan balance during your lifetime. This is pertinent to tax codes 7702 and 72(e).
Cut the IRS out of your retirement and protect your portfolio from major loss using our strategy. You’ll never lose your principal investment due to market losses and you’ll be able to capture some of the upside stock market potential (up to an annual cap). RAFT helps you to multi-purpose your nest egg to provide both Living and Death Benefits.
Improve yourself, build your wealth, secure your future.
Find Out If RAFT Is Right For You
Contact our offices in Cape Coral, FL in order to speak with one of our experienced strategic wealth coaches. They will help you determine if the RAFT strategy is right for your unique situation and help you take the next steps to protect your financial future. Call (240) 252-1500 or fill out our online contact form today.
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