Your tax rate will rise, there is no doubt about that! Here are a few things you should to do to avoid that tax hikes in the future and get more bang for your buck! I came across this article today that completely had me turning my head. I’m in full agreement with Janice Revell. Here is what you should do:
“All of this means that when you’re saving for tomorrow, you must factor in the very real possibility that you’ll be in a higher marginal tax bracket when you retire (Revell)” or get older (in my case) 
1. Because we are at lower tax rates per bracket then per say during the 1980’s, right now would be a good time to save your money! Why? Because if you save your money now and earn interest, you would be paying a lot less on your capital gains then you would in the future. This is true for many forms of investments.
2. Put your money in Roth IRA accounts! Why? Because if you postpone taxes on your total account till later (Traditional IRA), you will essentially be paying more on your capital gains (essentially :D)! Why not take in the tax deductions now and not worry about those high tax rates in the future? Don’t let your profit margin be undercut later folks!
3. Retirement wont save you from the tax rate hike! If you are receiving money from the government, you will still be tax at a higher rate than those receiving transfer payments from the Gov’t today!
Traditional IRA– if you have some superman abilities for making mad moolah through your IRA account then do so but remember that you would still be taxed on the contributions to your account in the future at a higher rate level.
Roth– If you have superman like abilities then why not choose Roth? lol
The article goes further into explaining some very scary things that might affect the way you think about money and saving! Take a look at it, its great financial literacy! Priceless information!
Enjoy,
Tony Tovar
May 21st, 2008 at 10:32 pm
Man the government really gets us with taxes don’t they? I wouldn’t never think about this situation when building my retirement portfolio. Do you think the increases in taxes will be so great we have to financially plan out retirement around it. Right now I’m assuming your not and only planning because it makes sense and is a smart idea! Overall this was a good article and a solid piece of good advice for a beginner and an advances saver.
Cheers,
bbrian017
May 22nd, 2008 at 5:04 am
Great advice. Although it is always a good idea to save money anyways. But the way you explained it should give people an added boost of inspiration. Good job Tony.
May 23rd, 2008 at 2:40 am
Thanks for your advice on my page Tony. That’s exactly the strategy I’m using now.
May 23rd, 2008 at 3:20 pm
Thank you Brian! I’m just planning. But yes, it I think in the 80’s you had to plan around Taxes, they were soo freakin’ high! phew, we dont have that now but i would not be surprised about future higher taxation. If Clinton goes into office, lets just say I think history will repeat itself and a Govt’ Deficit will decline.
May 23rd, 2008 at 3:20 pm
Hey JM! Thanks for stopping by!
May 23rd, 2008 at 6:33 pm
Tony I guess it’s a little bit different in the United States than it is in Canada but none the less you have great idea here. Lets say if the taxes didn’t rise and we look at the worse case scenario. we still have a lot of extra money we manged to save and I don’t see anything wrong with that
May 23rd, 2008 at 6:47 pm
Brian! Exactly! ;D