The “hidden” retirement fee

If yesterday’s email about baby boomers and the market didn’t strike a nerve, today’s might.

Remember all those years you paid into Social Security?

Remember when they said paying all those Social Security taxes would create a comfortable retirement?

Turns out good old Uncle Sam wants to help you out even MORE.

Here’s what I mean:

When you turn 70 (actually, the IRS publications say 70 1/2), you must take a “required minimum distribution” or RMD from your retirement account.

In layman’s terms what they do is… they figure out your life expectancy at 70 based on some fancy life expectancy tables… and then divide your total remaining savings by your life expectancy… and then make you take that amount of money every year until it’s gone.

Let’s say at age 70 your life expectancy is 15 years. Your remaining IRA balance is $100,000. The IRS takes $100,000 and divides it by 15. You must take $6,667 every year until the dinero is gone-o.

What if you live longer than the average life expectancy?

Ruh-Row Shaggy.

Too bad, so sad.

But here’s the fun part: if you draw even a meager middle-class income from your IRA or 401(k) or tax-free muni bonds or almost anywhere else…

… between 50% and 85% of your “tax free” Social Security income will be taxable as ordinary income… a tax on… wait for it… your previous Social Security tax (yes really, look it up).

So all that cashola you thought you’d be getting back… you ain’t gettin’ it back.

That also means the EFFECTIVE fee on your TOTAL retirement savings/investments just went up…

… 30 years of fees… ALL AT ONCE.


And yet… nary a word from your financial planner.

And understandably so.

If you want to avoid this fate, you have to plan many many years in advance or… bend over and learn to love it.

Now… I am not here to judge.

If the latter is your thing, hey… to each their own…

My clients, on the other hand, have an escape hatch.

It’s not a tax loophole, either. It’s a straightforward, plain-as-jane way to avoid this whole mess.

And it involves using boring old whole life insurance.

Join the email list for more info.

David Lewis, AKA The Rogue Agent, has been a life insurance agent since 2004, and has worked with some of the oldest and most respected mutual life insurance companies in the U.S. during that time. To learn more about him and his business, go here.