Chapter 5 Summary:
This chapter presented evidence of a dramatic need for increased taxes within the next few decades and proved with high probability that these higher taxes are coming. The need to plan for higher taxes is a crucial part of retirement planning. While the self-serving big financial firms promote building your nest egg using tax-deferred accounts (IRAs, annuities, and others), you follow their bad advice at your peril! Why would you avoid paying taxes on a smaller sum now in order to pay taxes on a larger sum at a higher tax rate later?
What sense does it make to defer taxes if you will be later paying taxes on a larger sum at a higher marginal tax rate? As already established, the over-promotion of tax-deferred retirement accounts is a misconception benefiting the big financial firms because of their ability to charge higher fees.
Other than raising taxes, governments have only one other option to deal with the huge debts they have built up. That option is to cause rapid inflation, a move which reduces the appearance of the debt load of past extravagances. But this high or runaway inflation would destroy the value of your intangible investments and savings just as much as, if not more than, higher taxes.
The following chapters present other, much better options to prepare and plan for retirement.