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# A Math Formula that Could Sink Your IRA or 401(k)

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Having enough money for retirement is a difficult enough challenge. To make the situation worse, many Americans will run out of money in their 401(k)s and IRAs faster than they think, because of a math formula they never teach you in school.

For example:

• Tom and Mary want \$100,000 from their IRA to support their lifestyle in retirement.
• Tom and Mary have a 30% effective tax rate.

Simple math says they need to pull \$130,000 out to net the \$100,000 they want… but that would be the wrong answer!

How it really works, using the special formula is this:

Take the amount of money you need after taxes (\$100,000) and divide by one minus your effective tax rate (0.3). The formula looks like this:

\$100,000 / (1-0.3) = \$142,857

We are actually dividing \$100,000 by 0.7 using the right method, which gives us \$142,857, or \$12,857 MORE than the simple calculation. What does this mean?

Your 401(k)s and IRAs are decreasing by a lot more than originally thought!

So how do we get around all of this? We control how much money is in your tax-deferred bucket to create a tax-free bucket. What is the appropriate mix for you?

Let’s take a look at www.ifcadvisors.com/tax-free/

Remember, your tax preparer is likely only looking at your current tax situation at filing time. We look at the next 30 years and show you how to prevent your savings from being eroded by the IRS. Don’t wait – contact me today!