Here’s a sobering thought. The average debt per capita in Greece is around $32,000. The average debt per capita in the U.S.? $51,000. If you add in the unfunded liabilities of the U.S. Government (what we’re required to pay by law for programs like Social Security, Medicare and Medicaid), that number skyrockets up to around $400,000 for every man, woman and child in our country.
So, the next time someone tells you something like, “If we’re not careful, we’re going to go down the road to Greece!”, you can simply say, “Too late!”
This discussion, of course, highlights the importance of having frank discussions with our clients and prospective clients about the types of accounts within which they’re growing their assets. Remember, the way the Federal Government will most likely liquidate its debt is through increased revenue, i.e., higher taxes. If your clients believe their tax rates will be even 1% higher in retirement than they are today, then mathematically, it makes sense to rearrange their assets into tax-free accounts.
Use the above example of debt per capita in the U.S. vs Greece, and then follow up with this simple question: “Do you think your taxes in retirement will be higher than they are today?” If the answer yes, you can then segue into the discussion of tax-free retirement tools such as Roth IRA’s, Roth Conversions and permanent life insurance.