Taxes in Retirement

  As you know, one of the most important parts of your retirement planning, taxes. More specifically, how taxes can influence your retirement income planning, including the effects of taxes on your qualified money, Social Security and other sources of income. The first thing to do is to take a close look at the risks you will face going into retirement. Are you approaching retirement? Are you already retired? Have you previously retired and then starting working again, whether on a full-time or part-time basis? Okay good. Interestingly enough, regardless of which group you fall into, there are certain risks you all face going forward into the future, and unfortunately, they are only amplified the longer you live. So what exactly are the major risks you face? Market risk is a major risk. I’m sure the vast majority of you have money invested in the market whether it’s self-managed or through an advisor or broker or even a professional money manager. Obviously, we know that if the market drops, you have the risk of losing a significant portion of your retirement assets. Tax risk. Our country is approximately $20 trillion in debt, and I don’t want to get political, but I do not foresee long-term circumstances in which taxes are likely to be lower than they are today. If we want to pay off the debt, taxes will have to increase. Inflation. The cost of goods rises every year. You have to be able to at least withdraw what the inflation rate is to keep up with it. Are your retirement accounts prepared for that reality? Health care. Anyone here know someone in a nursing home? Everyone probably wants to avoid going into a nursing home if possible. Again, is your big picture retirement plan designed to accommodate those costs? Finally, longevity. Now what’s interesting about this group of risks is that if I were to take a poll or survey on which one people thought was the most dangerous, I’d guess the vast majority would either say market risk or inflation. The reality is, however, that longevity is the biggest risk. And honestly, if any of my clients were with me right now, I’d feel just a little bit embarrassed. That is because I feel it’s important for attorneys to spend time with their clients explaining how these things work and all of us are so busy that we often forget to schedule time to sit down and review the important things. Perhaps you haven’t met with an attorney before, or maybe you haven’t seen your attorney in several years. When I meet with people, I make sure they understand everything we’ve talked about today. It’s essential for everyone to know these things as they navigate their retirement years. We are staying busy during these uncertain times but we will make certain that if you need an attorney to discuss your retirement risk solutions through estate planning and financial planning.  We look forward to a honest conversation about retirement and legal/financial goals. .