Thursday, March 28, 2019

Thrifty Thinking: Pay Zero Taxes Legally in Retirement

Most forms of retirement income are taxedIn many cases, people face the unhappy surprise of paying more taxes when they are retired than they did while they were working. Tax-deferred retirement accounts such as a 401(k), IRA, or 403(b) can be like sitting on a tax time bombPamela says. Why? The common assumption that people will pay less in taxes when they retire doesn’t pan out for many retirees.

“Taxes are already one of the three largest expenses for retireesand they are likely to increase in coming years,” Pamela says. “The ballooning national debt, which recently passed $21 trillion for the first time, and growing government expenditures as more people retire practically guarantee it.”
There are two main reasons many Americans are paying higher taxes in retirement than they did when they were working: Required Minimum Distributions (RMDs) mandate that retirees start drawing money from tax-deferred accounts around age 70½ – whether they want to or not. This often pushes them into a higher tax bracket. RMDs and income from other sources can also end up forcing retirees to pay taxes on up to 85 percent of Social Security benefits.
“Financial planners and CPAs are seeing some retirees’ tax rates double or more because of this,” Pamela says.
How can people avoid the tax time bomb? Pamela recommends a wealth building strategy she calls Bank On Yourself that utilizes a specialized form of high cash value dividend-paying whole life insurance to save for retirement for several reasons:
  • It uses after-tax money, which grows tax-deferred and can be accessed tax-free under current tax law.
  • Withdrawals are not subject to RMDs that can push people into a higher tax bracket.
  • The IRS does not count income from this method when determining how much taxes people pay on Social Security income. Income from these plans also won’t increase Medicare premiums, unlike IRA distributions and tax-exempt bond income.
If, like most folks, you believe tax rates will go higher in the long term, you can eliminate unpleasant surprises by paying taxes up front,” Pamela says. “Then the money in your retirement savings can be truly yours to keep, without being counted against you.”

About Pamela: Pamela Yellen is founder of Bank On Yourself, a financial investigator, and the author of two New York Times best-selling books, including her latest, "The Bank On Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future." Pamela investigated more than 450 financial strategies seeking an alternative to the risk and volatility of stocks and other investments, which led her to a time-tested, predictable method of growing wealth now used by more than 500,000 Americans. Visit

For more information visit her online press kit at and public site

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