Tax Efficient Retirement Planning


The Need For Tax Efficient Retirement Planning

For many years, we’ve been warning our clients and prospective clients that taxes will be increasing. This is not a prediction, but a result of plain arithmetic. Our government will soon need huge cash infusions to meet its commitments and it will have no choice but to raise taxes on those who have worked hard, sacrificed, saved, and played by the rules.

You’ve been told to put money away for retirement in tax-deferred accounts like 401(k)s and Traditional IRAs.  Those who saved the most diligently in these types of accounts will soon realize that a substantial chunk of those tax-deferred retirement savings is sitting ducks for revenue-hungry state & federal governments.

Did you know that as your 401(k) or IRA funds grow, so does the government’s share of those funds since they are a partner in your savings?  But unlike a traditional business partner, Uncle Sam can increase his partnership percentage of your tax-deferred savings whenever he needs more money, and we feel that day is coming soon.

The question then becomes “Are you prepared?”  You can be, but unfortunately for most people, the answer is “no” because they believe that there is no way it can happen to them.  You probably didn’t realize that we’ve had federal income tax rates exceeding 90%! In fact, from 1936 to 1981, the top federal income tax rate was never below 70%.

Higher taxes mean less money for your retirement years. Even if you think you are prepared with a plan, it is unlikely that you are. In fact, in most cases we see the kind of planning you need to do now to avoid the onslaught of higher taxes.

If you have to wonder if you have a plan to reduce your income taxes now and in the future, then you do not have a Tax Efficient Retirement Plan.  If you don’t have the right type of plan then you could end up with what we call “The Government Plan” – and as you can imagine, that is not the plan that is best for you.

Your Tax Efficient Retirement plan needs to be implemented as soon as possible, before the tax train arrives. You need a Tax Efficient Retirement plan to move your tax-deferred funds from accounts that are forever being taxed to accounts that are never taxed – a plan that includes a healthy dose of tax-free savings vehicles.

The good news is that right now we have some of the lowest tax rates in history. Now is the time to create tax efficiency in your retirement years and beyond. Even your loved ones can benefit from the planning we do.

The tax code actually includes several tax moves you can take advantage of today to create tax-free retirement income, but few people are taking advantage of them.  There will never be a more cost-effective time to leverage your current assets into tax-free assets, and as you move your tax-deferred funds to tax-free territory, you reduce the impact of future tax hikes on your retirement savings.

Our planning provides you with a roadmap of how to become tax efficient in retirement  — and for some folks we able to get them to a 0% tax bracket in retirement and that virtually eliminates higher taxes from the list of things to worry about when you retire.

It’s time to face reality. Taxes will increase, and tax-deferred accounts like 401(k)s and IRAs are the low-hanging fruit waiting to be picked by Uncle Sam. Let us help you keep your hard-earned retirement savings out of Uncle Sam’s reach.