TAX PLANNING

Will your taxes be higher or lower after you enter retirement?  

Many people assume they’ll have less income in retirement, and predict a reduced tax bill will follow.  But it’s not always quite so cut and dry. 

Your happiness in retirement is largely attached to your ability to spend on the things and activities you value most.  When everyday’s Saturday, it’s rare that you’ll want to take a pay cut in retirement.

There are also practical limitations that are often overlooked.  You typically have less deductions and credits than you did while you were working.  The house is paid off (or close to it), the kids are out of the house, and the money that you gave to charity is often replaced with the contribution of your time – fulfilling and rewarding, but not deductible.  

In addition, the income you draw from your savings and investments can often add up to more income than you might have anticipated. 

In fact, did you know that the order that you withdraw from your investments can add or subtract over one million dollars to your plan?  We call this the “7-figure planning decision”.

Our tax planning strategies aim to help keep your taxes low today, while creating as much future control and flexibility as possible.

We help our clients cut their retirement tax bill by working through the following process each year:

  • Completing an annual tax return analysis
  • Evaluating multiple Roth conversions strategies (there’s more than one!)
  • Coordinating your income streams to help keep your effective tax rate as low as possible
  • Helping you optimize your investment strategy by ensuring that your assets are invested in the most appropriate tax-bucket (Asset Location)
  • Designing a plan that sends your money to your family or charity rather than the government when you die

Remember, $1 saved in taxes = $1 earned in an investment.  Proactive tax planning can help you keep more of your hard earned money while reducing unnecessary risk.

💰 Want to learn more about the TWW RETIREMENT PERMISSION SLIP and how you can lower your taxes in retirement? Click here to get your RETIREMENT PERMISSION SLIP.

While tax and legal issues may be discussed in the general course of financial and investment planning, Advisory Alpha does not provide tax or legal services.  Please consult with your tax or legal professional prior to making decisions relative to these issues.