Tax Planning

Income tax planning is a very important part of the financial planning process.  Not only is tax planning an issue when you are working, it is critical in the first few years of retirement and through age 70 1/2 when you must begin to take Required Minimum Distributions from your retirement accounts.  Just one example:  IRA to Roth IRA conversions may be advantageous if you are temporarily in a lower tax bracket.

planning-timeline

Whether you are transitioning from full time to part time work or planning on retiring without a slow down period, and assuming your income tax bracket will decrease, it is particularly advantageous to address tax planning at this time.  Many clients will say to me:  “I’m retiring and my financial situation will become simpler.”  In actuality, you may find that your finances become more complicated because of the transition from saving to withdrawing funds and the process of ‘creating a paycheck’ from your savings.  You will need an advisor with a process to focus on the drawdown or withdrawal phase instead of solely managing investments and gathering more assets to invest.

If you believe this may describe your situation, give us a call to help you decide if we should get together.