Abe Dispennette: Invest Locally

Los Alamos
When I ask my clients what they see as their biggest threat to retirement the normal nervous answer is not having enough money. This answer is usually followed with a detailed explanation on how they plan to sacrifice and save more into their 401s to mitigate the threat. While this certainly is an issue we all need to closely monitor it does happen to ignore a hidden threat flying under most people’s radar – taxes! 
I have found that many people think their tax burden will be nearly zero in retirement and they plan to live on 25-50 percent of their current standard of living because costs will be all down. This, sad to say, is very dangerous planning.
Here are some facts. When adjusted for inflation, families making over $200,000 have paid between 30-60 percent in taxes throughout our country’s history. Currently a family earning $230,450 is in a 33 percent bracket. Right now the US government is on pace to bring in a record $1.5 trillion in taxes while also projecting nearly $500 billion in deficit spending (https://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mts0316.pdf).
Current presidential candidates are calling for an increase in taxes to the tune of $1 trillion more over the next decade. This call will only intensify if deficit spending continues to grow. But guess what, the government already has trillions of dollars to tap into – your Traditional 401k! The government can’t wait for you to retire, so much so that it even forces you to retire at 70 1/2 when you have what is called Required Minimum Distributions. And here is the kicker, you don’t even know what the tax rate will be when you do retire. You are being set up to start taking the most money from savings when you have the least amount of deductions to protect your income.
I’m very much a believer in taxes and the various programs our country has to give a safety net to our fellow citizens that find themselves in need. I also believe in being wise in how I save my money so I can have a better idea on what my retirement will actually look like.  

While I spend a lot of time talking to folks preparing for retirement, I also spend a great deal of time talking to people who are currently retired. Trust me when I say for many of them, taxes is the biggest surprise they never saw coming.

Is your retirement planning experience someone passing out a sheet of paper with hard to understand definitions and a few boxes to check on where to put your money? Have you called your current firm and after navigating through the automated system talked to someone in a call center that is only trained to move your money around, not give you the advice that you want or need?

Here is the gap I would love to fill. State Farm has partnerships with some of the best firms in the investment business and those who choose to put their extra investment money in those accounts have 24/7 access to a human being – me! Traditional 401ks are not bad, they just need to be balanced with other methods that take into account other risks like taxes.

I love protecting your homes and cars, but I’m passionate in making sure we all have a happy retirement together. If you have any concerns with how you are currently invested, I would be honored to sit with you and present different strategies for the long term future of your lifestyle.

Abe Dispennette is the agent at State Farm Insurance, 1362 Trinity Dr., Suite B in Los Alamos and can be reached at 505.662.2200.