The top 10% of America’s wealthiest families own 55.1% for the tax free investment gains built up in life insurance according to a 2007 Federal Reserve report, while more at more Middle class Americans are pouring more money into qualified plans(IRA, 401K, Thrift savings) than ever before.
How can this be that Americans are setting themselves up to be taxes at what will almost assuredly be a higher tax rate in the future.
Is middle class America blind to the mass exodus from the stock market by the wealthy?
Are people in America so poorly educated that they simply don’t have enough information to choose what is clearly in their long term financial interest?
These three vexing questions are important to answer because it is very clear that the middle class will have themselves to blame come retirement time. In the October 3 issue of the Wall Street Journal a very insightful article titled ” Shift to Wealthier Clientele Puts Life Insurers in a Bind.” http://bit.ly/cW1mRQ (click here)
Please read the above article because it details the fact that the wealthy have been moving their money out of other investments and into cash value life insurance for the tax free advantages. For the first time in history it is not the middle class holding up the life insurance industry but the Wealthy. So while the middle class run toward the qualified plans created in the eighties and offered by employers all around the country the wealthy are opting out of the tax system.
Success leaves clues
What the wealthy have known for years is that the proper Cash Value Life insurance becomes a huge tax shelter and the best means of passing on tax free wealth to future generations. With the national debt out of control and social security and medicare needing to be funded the only way to raise the additional revenue will be raise taxes on income and on retirement plans. The wealthy are getting out of the way of this run away train and so should you.
Why are the Middle class going toward paying more taxes?
The Middle class is really not getting good advice. Most are using qualified plans issued by their employers that offer pretax benefits and contribution matches. Truthfully, no one has even thought about how bad the plans will be from a tax perspective. Avoiding tax on the seed to pay possibly higher taxes on the harvest. The Middle class haven’t really looked at the unparalleled risk of the stock market and how strategies like dollar cost averaging and investing for the long term have cost many Americans half their life savings in 2008 when the market went from 14000 to 6700 overnight.
Further, the advisors of the middle class are not informing their clients about whats going to happen when the market comes back and baby boomers make a move toward safety and exit the market in mass like they did in Japan 20 years ago. When the Japanese sat in the same position 20 years ago they took all of their money out of the market and now two decades later the Japanese stock market is still 75% under where it was 20 yrs ago even though the economy has recovered.
Financial Education in the Biggest Imperative for Middle Class
If you are reading this blog you can’t afford to ignore the trend of the wealthy going into tax free life insurance. http://bit.ly/cW1mRQ (click here). The proper tax free strategy is going to be a game changer like no other opportunity in your lifetime. But be clear that not being tax free is totally your choice and in fact it always has been.
The options available to the Wealthy are totally available to the Middle Class. The tax laws are the same for the entire country. Ask yourself what are you missing and get educated.
Please give me your feedback on the article in the Wall Street Journal – http://bit.ly/cW1mRQ (click here)