Planning for your future is a big deal. You may be just starting your career or building a family with retirement still years away. Or retirement may finally be getting closer. In every case, it is the right time to get serious about your finances. Investment and tax planning should go hand in hand. We can’t stress enough how much an experienced, qualified team of financial experts helps you build a plan that works.
Tax Planning
We often talk with our clients about the value of tax planning while they build plans and set goals for the future. Doing both at the same time helps you choose accounts that work for you. It also makes it less likely that those accounts will create exorbitant tax bills when it is time to retire. Our tax planning and tax preparation services help with exactly this.
A wise investment plan weighs tax liability strategies alongside investment choices. In short, investment and tax planning should happen together.
When might your plans break down? This is a hard question to answer. However, a common problem can occur when the vast majority of your net worth sits in a 401(k) or IRA. Then, when retirement comes, your distributions count as ordinary income on the tax return, which means higher taxation per dollar.*
Tax Loss Harvesting
With assets in a taxable account, a qualified, tactful adviser may help you structure a plan. That plan can offset the taxes you will face on both gains and income. As a result, you can aim for optimal asset allocation and minimal surprises.
A better plan could be to contribute to a ROTH IRA and a taxable brokerage account. This may provide ample flexibility to source funds during retirement without a large tax burden. (* per current, general tax law)
This planning should also include a design for inheritance and for passing on a financial legacy in a tax-efficient way. All the parts of the puzzle connect. So treat them that way when you build a solid financial plan that works for you. Our retirement planning process looks at these pieces together.
Remember, many people overlook diversity across the tax registration of their accounts. So focus on it now, since investment and tax planning work best together.
Want to talk to someone who can help you create a healthy financial plan for your future? Call Toomey Investment Management, Inc., today.