Retirement Nightmare: Feds Spending $4.28 Trillion of Taxpayer Money on Bailout

CNBC has added up all of the promises the corrupt parasites in Congress have made to their banker buddies on Wall Street and come up with a figure: $4.28 trillion! That is, CNBC says, approximately $4.2 trillion more than the U.S. spent fighting World War II, even adjusting for inflation.

Try $4.28 trillion dollars. That’s $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.

Not only is it a astronomical amount of money, its’ a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and new releases. Strictly speaking, not every cent is directed a result of what’s called the financial crisis, but it arguably related to it.

Some 68-percent of the sum falls under the Federal Reserve’s umbrella, while another 16 percent is the under the Treasury Asset Relief Program, TARP, as defined under the Emergency Economic Stabilization Act, signed into law in early October. (The TARP alone is bigger than virtually any other US government endeavor dating back to the Louisiana Purchase. See slideshow.)

And here’s the REALLY bad news: This is what an allegedly conservative Republican administration has presided over.

When Barrack Obama and a possibly filibuster-proof majority of Democrats in both houses of Congress take over in January, the spending is going to go berserk. With Obama promising tax cuts for “95% of the American people”… with his ambitious program of free universal health care… with expanded Social Security and Medicare benefits… with current government pension and Social Security liabilities of some $56 trillion… it’s going to be a very EXPENSIVE four years.

No wonder so many early retirees are heading for the hills — or, more properly speaking, Caribbean tax havens where they can legally run their international consulting businesses free of Uncle Sam’s confiscatory taxes.

(It’s also little wonder that Congressional parasites like Rep. Carl Levin (D, natch!) are now promising a new campaign against expats and other free people who don’t allow the Feds to pick their pockets without a fight but use every legal strategy in the book. They are trying to close the loophole that allows Americans to earn up to $85,000 tax-free when living outside of the United States.)

Take Advantage of Recent Market Crash to Lower Retirement Taxes

CPAs are urging their clients to make lemonade out of lemons with the recent sell-off in the stock market by using a simple tax strategy to reduce their taxes when they retire.  The basic strategy is to put off taxes for later by making good use of IRAs and especially Roth-IRAs.

“Since the market is down, now is a great time to do a Roth conversion,” attorney and CPA James Lange told the Pittsburgh Tribune-Review.  Lange is the author of Retire Secure! Pay Taxes Later, which sold 100,000 copies and reached No. 1 in the retirement planning category at Amazon.com. Lange just finished its second edition, updating tax law changes, which will be published in February.

How can IRAs help in a market where the Dow Jones industrial average dropped from about 11,000 to about 8,000 within three weeks?

A traditional IRA may buy more securities, as the market is down and the investment capital is pre-tax dollars. A Roth IRA might even be better, said Lange.

In a Roth conversion, the person pays taxes on the amount moved to the Roth. The tax liability depends on one’s income-tax bracket. So, it’s better to convert the Roth after retirement, when the person is presumably in a lower tax bracket.

“If the market goes up later, the amount in the new Roth IRA account will grow income-tax free,” he said. “And when you or your heirs make withdrawals from that Roth IRA, it will be income-tax free.”

For example, a traditional IRA that was worth $100,000 a few years ago might have declined in value to $80,000 today, meaning there’s no taxable gain. Then, if that $80,000 is switched into a Roth IRA and increases to $120,000 in two years, the gain is tax-free because those are the rules of a Roth.

Had the money stayed in an IRA and the person in a 25 percent tax bracket withdraws all $120,000 two years from now, he would pay $10,000 in taxes.

One caveat, said Lange, is that those with gross income above $100,000 must wait until 2010 before they can convert a traditional IRA to a Roth IRA.

Lange also allows for the fact he is not an expert money manager. So, what if the market doesn’t recover in the next year or two, but continues to fall in a long, nasty recession?

To learn more, visit James Lange’s website.