IRA – Idly Ripping-off Americans

Ah, yes. The good old IRA, your ticket to financial security in your old age. What a crock. And I speak from experience because I just went through it.

See, this is how the government sells us on the idea of having our own IRA (Individual Retirement Account.) The way it is supposed to work is this: When you are young and making lots of money you can put money (a limited amount) tax free into your IRA. What a deal! Then, when you get old and you’re not making the big bux and your tax bracket has dropped from your youthful burden of 30% to a measly 15% you take the money out and pay a smaller  amount in taxes.

Bull-hockey! What REALLY happens is this: When you take the money out of your IRA the IRS (another scab on the face of America) counts that money as income, which bounces your tax bracket back up to 30% and since you aren’t making a lot of money – guess what – the government has screwed you again.

Now, a Roth IRA has the taxes taken out when you put money in, so if you have one of those you won’t get caught in this trap. But with a regular IRA it’s a case of “Gotcha!” and you’ll find that when you need the money the most, the IRS takes most of it away.

Let’s face it, citizens. We cannot win.

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2 Comments on “IRA – Idly Ripping-off Americans”

  1. Serena Says:

    You got caught in what I’ve observed for years. The phrase I put in one of my earlier newsletters, circa 1996, was a direct quote of Clinton’s: “There’s a lot of evidence you can sell people on tax increases if they think it’s an investment”. You’re fortunate if you’re in a lower tax bracket on retirement. All the retirees I know are in the highest tax bracket of their lives on retirement because it all adds up…the pension, the IRA, the investment income and no home mortgage interest, no dependents or other deductions. Voila….higher taxes!

    What to do? The Roth is first of course. Then you could own stocks that appreciate and kick off dividends so that when you sell or report the dividend income, you have capital gains or qualified dividends which are taxed at lower rates, and especially in 2008 through 2010. But do consider that if you are paying ioncome taxes, it means you have income. That’s more than some people are able to accomplish given their circumstances, be it under their control or not.


  2. That is a very good tip particularly to those fresh to the blogosphere.

    Simple but very accurate info… Thanks for sharing this one.
    A must read article!


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