Friday, January 01, 2016

Maxing Out 2016 IRA Contributions

The first financial decision I made in the new year was to make the maximum allowed contribution to my traditional IRA. The IRS contribution limit for 2016 is $5500. I always have more than enough cash at the end of one year to ensure I can contribute the maximum amount at the start of the new year. The IRS did not make any COLA increases in any tax-advantaged retirement accounts for 2016. Our tax authorities must think inflation does not exist, echoing the Federal Reserve's narrative.

The lack of statistical evidence for inflation is deliberate government policy. Shadow Government Statistics notes how government agencies massage their numbers to minimize entitlement payouts. Contributing assets to a tax-advantaged retirement account is a necessary but insufficient condition for building wealth. Holding the right kinds of assets in a retirement account matters during periods of high inflation. Hard assets protect wealth during inflation.

Many Americans don't even have retirement accounts, and some of the ones who do won't find ways to make the largest possible contributions. One need not hire an elite "income protection service" catering to billionaires to prepare their retirement assets for safety. Everyone who doesn't splurge during holiday shopping can save cash meant for their IRA in the new year. Anyone can find publicly traded securities for hard assets that will fit in an IRA. Structural modifications making the account "self-directed" are expensive, unnecessary, and legally questionable. The simplest, cheapest solutions are already at hand.