In chapter one, you will learn exactly why understanding the role income taxes will have on various investment products you may be using is so crucial, and why taxes pose such a threat to your financial well being.

For example, the book looks at how much of the government’s revenue is spent on Social Security, Medicare, Medicaid, and the interest on the National Debt, and what that could mean for tax rates in the years ahead.

Chapter one will also give you a quick overview of the strategies you will learn in the following chapters, particularly why understanding the three “buckets of money” is so crucial.

Chapter two is all about the “taxable bucket” of money. In the book’s framework, this bucket covers the unexpected costs in life that are typically more “immediate” and that you need quicker access to funds for. The key word: Liquidity.

Just like any bucket of money, the book discusses how much belongs in this bucket, along with the pros and cons that accompany it… All of which you will learn in the book!

The tax-deferred bucket is the one that most of us are familiar with… This bucket includes investments such as a 401(k) and IRA, which a lot of people tend to favor for two reasons: 1) You get to “defer” your taxes on the money you put into those accounts, and 2) You feel like you can “set and forget” it most of the time!

However, the book explains consequences that the majority of people are not aware of… This bucket has its place, and it is different from the “tax-free” bucket that is talked about in chapter 4. Those taxes come due at some point! And taxes may not be as low for you then as they are now.

All this is covered in this chapter!

This, my friend, is the heart of the entire book. Most people that are saving (or intend to save) for retirement are familiar with, and perhaps even using, the first two buckets of money… But what about this one? It is the bucket many people overlook.

The book explains how the tax-free bucket works, and the rules that decide whether money in it reaches you without a bill from that Uncle that nobody likes… Uncle Sam!

Now, this isn’t a situation where you can simply know what products to use and dive right in, there are a few key points that you must be aware of, that are discussed in Chapter 4.

Chapter 5 covers cash value life insurance, the book’s main example of the tax-free bucket. Withdrawals up to what you have paid in, and policy loans, can generally be received income-tax-free when the policy stays in force and is not a modified endowment contract.

The book also covers the trade-offs: loans and withdrawals reduce the cash value and the death benefit, a policy that lapses or is surrendered with a gain can create a tax bill, and paying in too much too fast can make it a modified endowment contract.

THIS is why you should carefully read chapter 5.