By Scott Hanson
Ouch! Poor Tax Planning Hurts
I’ve been an investment advisor for over 25 years and have worked with thousands of people. Over that period, I’ve been witness to some truly terrible (and avoidable) tax outcomes involving otherwise savvy and conscientious investors.
With that in mind, not a week goes by that one of my advisors doesn’t meet with a newly-retired person or couple who, much to their dismay, discovers that they’ve been badly overpaying their taxes. I’m not referring to the type of overpayments that come back to you in the form of an IRS refund. I’m talking about needlessly or accidentally overpaying the government tens of thousands of dollars that you’ll never see again.
The problem is that tax laws in retirement are frustratingly complex. Navigating the rules and regulations is no simple task, and the wrong decisions or advice can be the difference between a manageable tax bill and a staggering IOU to Uncle Sam.
Strategize Taxes Like You Strategize Investments
If you’re looking to retire in the next few years, you’ve likely spent a fair amount of your working life thinking about your investments and how they can best serve you in the future.
But if you’re like most folks who are on the verge of retirement, then you probably haven’t given nearly the same amount of attention or energy to your tax strategy as you have to your investment portfolio. Yet between a smart investment strategy and a smart tax strategy, the latter can actually be worth more to you in the long run. Simply, without a plan in place, needless tax errors or oversights could reduce your retirement savings by 10 or even 20 percent. [Read more…]