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The Retirement Savings Time Bomb...and How to Defuse It

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The Retirement Savings Time Bomb...and How to Defuse It

A 5 Step Action Plan for Protecting your IRAs, 401(k)s, and Other Retirement Plans from Near Annihilation by the Taxman

Penguin,

15 min read
10 take-aways
Audio & text

What's inside?

Avoid taxes on your retirement savings: use good timing, life insurance, stretch IRAs, Roth IRAs and estate planning.

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Editorial Rating

9

Qualities

  • Innovative
  • Applicable

Recommendation

Despite grand claims, most business books do not really provide specific plans for saving or making money. In contrast, Ed Slott recommends five tactics that could save you thousands of dollars. Even better, he shows you how to use a "stretch IRA" to create a financial legacy, so your heirs in future generations can gain a financial benefit from their inheritance. He defines key concepts in estate planning and offers great advice about the benefits of Roth IRAs. Even though this book is not light reading, getAbstract highly recommends it to sophisticated investors and any American taxpayer who is serious about keeping a large percentage of his or her estate from the clutches of Uncle Sam. One caveat: verify his advice with your tax professional. Slott published this book in 2003, and some tax laws have changed since then.

Summary

The Retirement Bomb Explodes

The greatest wealth transfer in human history is now taking place. The generation that fought in World War II is dying and passing its assets to the next generation, the baby boomers, who are entering retirement. During their working lives, the boomers focused on getting the best investment returns possible. Now, they face "the financial shock of their lives," as they discover that federal and state taxes are eating up their inheritances, and that they owe additional taxes on their pensions and other retirement accounts. This is the "retirement savings time bomb."

What to Do with Company Retirement Savings

Like most people, when you retire, you’ll probably receive a check from your company retirement account - money you have saved over the course of your working career. It may be the biggest single check anyone will ever give you. You have three options:

  1. Roll the money over into an Individual Retirement Arrangement (IRA).
  2. Keep the money in the company plan (according to the company’s rules) or roll it into a new employer’s plan.
  3. Take the money immediately - and pay taxes on...

About the Author

Ed Slott is a CPA and consultant who has worked with many well-known firms. He is the author of Your Tax Questions Answered and the publisher of a newsletter, Ed Slott’s IRA Advisor.

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