When developing a retirement income strategy, many people forget about the impact of taxes in retirement. Most people coming into our offices are unaware of how their Social Security benefits will be taxed. They are not aware of how retirement taxes are affected by decisions such as;
- when to take money out of retirement accounts
- required minimum distributions
- changes in filing status
- when to pay off a mortgage.
It is crucial to coordinate these decisions. The results; more after-tax income for you. As you near retirement it is important to do careful tax planning. You will want to evaluate the effect of taking IRA withdrawals early and taking Social Security later versus taking Social Security early and taking IRA withdrawals later. These decisions can make a significant difference in the amount of after-tax retirement income you have.
The amazing thing about an income strategy that incorporates taxes is that it has nothing to do with the investments you choose. Anyone who develops income strategies based only on investment choices is making a big mistake.
Key Elements to Increased Spendable Income
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