The Robin with a Broken Wing

Read Time / 2 Minutes

Theme / Retirement Investing

Little did I expect the hunt to end the way it did.  Like many boys growing up in Idaho, I could not wait until I was old enough to get a BB gun. The day finally arrived, and I marched off into the woods near our house to hunt. 

I spotted a robin sitting on a low branch, I aimed (at least the best you can with a BB gun), I fired, and it fell off the branch.  After the robin hit the ground, stunned momentarily, it hopped away slowly – I had broken its wing! 

My goal for the hunt now changed, as I gently grabbed the bird, took it home, and put it in a cardboard box with a bed of fresh grass and dirty worms to eat.  I was now going to doctor the one-wing robin back to health!

Investing for retirement can often be like a robin with a broken wing.  We invest for the future in a traditional IRA or 401(k), only to find out that when we need the money in retirement, it is reduced by taxes.  While we anticipate having two wings to fly with, we are reduced to one.  We are to pay taxes according to Paul, “If you owe taxes, pay taxes” (Romans 13:7), but we do not need to pay taxes unnecessarily.

We do know that current tax rates are low (when compared to history), but we do not know what tax rates will be when we retire.  Many people expect tax rates to be higher due to the growing Federal deficit.  One way to be tax-wise is to invest in a Roth IRA.   In a Roth IRA, we pay taxes on the amount invested, but we do not pay taxes on the growth when we withdraw it in retirement (stipulations apply).

After a few days of trying to doctor the robin, I let it go in the woods.  I remember it hopping off to whatever destiny awaits a robin with a broken wing.   Unlike the robin, we can be more certain of our destiny by investing in Roth IRAs today and not worrying about tax rates in the future.

Doug Hanson, MBA

Wealth Manager