100% Tax Free!

In the classic movie “It’s a Mad Mad Mad World” a scene unfolds about how to split up the share of the money and in the scene the great Jonathan Winters tells the group “Everybody has to pay taxes! Even businessmen, that rob and steal and cheat from people everyday, Even they have to pay taxes!
(Check out the entire scene here It’s a Mad Mad Mad World – Money)

Well…. I am here to tell you that you don’t have to pay taxes in retirement, if you do it right!

If you are going to Retire Right, you need to remember one simple word, “ROTH.” That four letter word is what will give you what you need in retirement.

There are two type of ROTHs that we will use, IRA and 401k.
Check out these links for more information:

  1. ROTH IRA
  2. Comparisons

To keep things simple, a ROTH allows you to pay taxes on money you have earned before you use it for investing, instead of after. Compared to a traditional IRA or 401k, which you will pay taxes on the earnings later in life.

Let’s look at an example:

Assumptions: Income = $100,000, Tax Rate 25%, Annual Growth 5%, 40 Years to Grow

Roth
Retirement Investment = $5,000
Income Tax = $25,000
Investment Value after 40 years = ~$36,000
Taxes in retirement = $0
Total Taxes = $25,000

Traditional
Retirement Investment = $5,000
Income Tax = $23,750
Investment Value after 40 years = ~$36,000
Taxes in retirement = $5,400
Total Taxes = $29,150

In this example we used a basic example to show how with a ROTH, you can pay taxes now, then have your earnings grow tax free. This is just an example of investing from a single year. When you combine 40 years of investing with a ROTH, you still pay $0.00 in taxes!

Using this tax free tool, you will be able to grow to Retire Right!

-T

If you want to get started investing and don’t want to worry about what to invest in, check out my created Motifs

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