Tax Center

While we are currently enjoying some of the lowest marginal tax rates in the modern history of our country, this year's election may result in a roll-back of those tax cuts. There are a number of national politicians who campaigned to raise taxes, and people at or near retirement are potentially more vulnerable than anyone else because they live on their after-tax income.  Higher taxes means less after-tax income.

It's not how much money you've saved (or are actively saving), but how much you have to spend after-tax. Your retirement income and financial security are directly impacted by tax policy and our firm is devoted to helping our clients minimize their exposure to Federal and state taxes.

Why should you care about taxes in your financial planning? Because taxes will increase in your retirement for any number of reasons. Income taxes help pay interest on the National Debt, and pay for Medicare and Social Security benefits. But guess what? We are scheduled to run $1 Trillion budget deficits for the next 11 years (Congressional Budget Office) and Medicare and Social Security will become insolvent in 2031 and 2034, if not sooner (source: 2023 Trustees Report, Social Security).

The IRS is your retirement partner, whether you like it or not. We help our clients structure their assets and create financial plans to minimize IRS' ownership of their savings and income.

The Congress and Senate built-in a safety net if the 2017 tax cuts didn't work. Even if taxes do not increase as a result of this year's election, by law, on January 1 of 2026, taxes will increase and revert back to where they were at the end of 2017. What does that mean? Taxes are now on sale. And who doesn't like a sale? Under current law, every investor has several years to restructure and reallocate their assets to minimize taxes by 2026, and thereby lower their exposure to future higher taxes.

Every year, we manage the process of shifting assets to greater tax-efficiency so our clients can keep more of their hard-earned savings, and benefit from higher after-tax income. The process of becoming more tax-efficient is the cornerstone of our financial planning.

The IRS is the world's greatest tax collector and, at the end of 2019, the Congress and the Senate got together to pass a bill that makes IRAs an even worse ticking time bomb for the next generation. Under the SECURE Act of 2019, if you pass an IRA to non-spouse loved one, they must completely empty it within 10 years. What this means is if you live a long life, they will be forced to take massive taxable distributions from their inheritances during their highest earning years. That could result in losing 40%, or more, of their inheritances to Federal Income Tax!

Unless, of course, you act. We help our clients combat the tax penalties of the SECURE Act of 2019 by creating strategies to restructure their assets so that they pass tax-efficient or tax free inheritances to their heirs. The by-product is greater after-tax income in retirement, as well.