The Power Of Zero Show Greatest Retirement Mistake
While on the golf course with his son, David McKnight got asked a question, by a couple of men in their early 70s, every pre-retiree and retiree wonders at some point: “What’s the biggest mistake people make when preparing for retirement?”
Many people spend their entire career saving money in tax-deferred accounts like 401(k)s and IRAs.
As that balance grows larger every year, it’s easy to get the illusion that all that money belongs to you, while a larger portion actually belongs to the IRS.
How much of that sum you ultimately get to keep depends on what tax rates happen to be in the year you take that money out.
David believes that the #1 mistake you can make in retirement is failing to plan for taxes.
Remember: if you arrive in retirement with the vast majority of your wealth sitting in tax-affirmed accounts, you’ve put yourself in a position where the government gets to decide what percentage of your money you actually get to keep.
Keep deferring, as you know you’ll be in a lower tax bracket in retirement, has been traditional wisdom for quite some time, but the math doesn’t work out anymore.
David touches upon the repercussions of the increasing tax rates caused by the nation’s skyrocketing and unfunded obligations.
His recommended step is to start shifting money from tax-affirmed to tax-free accounts.
David discusses the approach you should take and reminds you that retirement isn’t just about how much money you’ve saved… it’s about how much of that money you actually get to spend.
Mentioned in this episode:
David’s national bestselling book: The Guru Gap: How America’s Financial Gurus Are Leading You Astray, and How to Get Back on Track
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com