Episode #14: Don’t Forget About Taxes


The Principle:

Your retirement plan might look perfect…until you account for taxes. Don’t forget this crucial element of financial planning.

(Click the featured times below to jump forward in the episode)

Honest Takes:

[00:15] – Don’t Forget Your Taxes. 

  • According to the Motley Fool, one of the most common retirement planning mistakes is forgetting about taxes. Unless you work with a tax professional and incorporate tax strategies into you financial plan, you could find yourself paying up to Uncle Sam upon retirement. Many folks think their taxes will drop in retirement, but they could actually go up. Taxes are confusing, and it’s easy to assume your CPA is taking care of you, but that isn’t necessarily the case. You need to wise up, and build a specific plan for approaching taxes in retirement.

[1:15] – What’s Taxable In Retirement? 

  • Depending on which tax bracket you’re in, your Social Security could be taxed. In fact, up to 85 percent of your benefit could be taxed. Your qualified retirement accounts could be taxed as well. If you’re invested in a traditional IRA, you’re going to have to pay the taxes on any gains you’ve earned on your initial tax-free investments through the years.

[3:30]- A Recent Example.  

  • We had someone to come in with money invested in taxable, tax deferred, and tax-free accounts. However, most of their money was invested in brokerage and traditional IRA accounts. They were going to have to pay large amounts in taxes once they began taking their required minimum distributions. Basically, their current advisor had been inefficiently managing their portfolio. Furthermore, their CPA was only putting together their tax return. This person had the goal of donating their money to charity. Instead, they were giving most of it to Uncle Sam. Don’t forget, there’s a big difference in tax filing and tax planning. A tax plan for their wealth would’ve gone a long way toward helping them maintain control of their money.

More To Learn:

  • [6:00] – Ways To Donate To Charity.

Today’s Truth:

Other Virtues:

The host: Brian Bowen – Contact

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