Retirement Tax Planning can Make or Break your Game Plan!
Retirement tax planning may be the last thing on your mind or your financial advisor’s mind. The fact is, it’s hard. So people tend to avoid it. But it just may be one of the most important aspects of your retirement plan. A good overall tax strategy can benefit your bottom line forever.
Retirement income can be significantly impacted by taxes. So reducing those taxes as much as possible can be of great benefit.
View the 1-minute video at the left and read on to learn more about tax-efficient withdrawal strategies and how a personalized tax plan can benefit you.
What Do We Mean by Withdrawal Strategies?
If you have any retirement savings, the dollars will be in one or more of the following account types:
- Taxable (checking, savings, brokerage accounts)
- Tax-Deferred (401(k), 403(b), Traditional IRA, or similar accounts)
- Tax-Free (Roth IRA accounts)
The question then is, what is the most tax-efficient way to withdraw funds to augment your income? Will you drain one of the account types first, then move on to the next one, etc.? Or will you do a pro-rata withdrawal strategy by taking a fixed dollar amount or percentage from each of the three categories?
That’s the question we analyze for you to determine the most tax-efficient withdrawal strategy which puts more dollars in YOUR pocket.
Our Retirement Tax Planning Philosophy
As part of our Retirement Planning service, our recommendations will include an estimate of the tax ramifications for 3 major withdrawal strategies. Everyone is different, so we will perform the detail number crunching to determine what is best in your particular situation.
We will emphasize the advantages of tax-free accounts as these accounts can be withdrawn from, as the name implies, on a tax-free basis. If you do not have any current assets in tax-free accounts, such as a Roth IRA, we will look at a strategy to move money into a Roth. We can estimate when and how much money you can move and the overall dollar savings throughout your retirement time horizon.
Please note, we do not perform yearly tax preparation services. However, we will work with your CPA or tax preparer to formulate a single and cohesive tax strategy that meets your retirement planning objectives.
When Do I Need this Service?
Ideally, it is a good idea to start retirement planning at age 55 and up. That way, if there are any adjustments that need to be made, you have a better chance of making those changes before you actually retire.
For Retirement Tax Planning specifically, we started this service because many people were already retired and came to us asking about a tax strategy. So even if you are retired, this service will be beneficial to help you create as many tax-free dollars as possible.
If you have contracted with us for full Retirement Planning, then this Retirement Tax Planning is already included in that service.
As is our policy, we provide you with written recommendations and deliverables as specified in your agreement. We also recommend a regular check-point review once per year. We help you stay on track and evaluate any new situations in your life such as major events and how they may impact your overall retirement plan and goals.