People always ask why I’m so down on government retirement plans. The most dangerous thing you can do is put your money into a government sponsored plan. These plans are so full of limiting regulations. There are limits to how much you can put in, how long you have to keep it in and when you can take your money out. You get a little bit of a tax break, but to me, it makes a lot more sense to pay taxes on the seeds rather than the harvest.

The conventional thinking that you should put your serious money into a 401K, an IRA or some kind of government sponsored plan is solely based on the assumption that you will be in a lower tax bracket after your retire. What if that’s wrong and you discover that you’re in a 55% or 65% tax bracket during your retirement years? What if you had to pay taxes at a 68% tax bracket? Back in 1960, taxes were as high as 89%. You need to develop a consistent stream of tax free income. That’s what the wealthy and affluent have always done. It’s about the net return you keep, not the gross return you earn.

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