Could A Retirement Tax Advisor Help You Unlock The Retirement Of Your Dreams?

By Jeremy Wallace and Andrew Hart

We all know the importance of tax planning to minimize taxes and keep more of our hard-earned money in our pockets. But one thing that isn’t as obvious is how different tax planning is in retirement compared to when you’re working and accumulating wealth. 

It’s a catch-22. Retirement provides plenty of opportunities to be strategic with taxes, but that also means you could end up paying more taxes than necessary if you aren’t strategic. Withdrawing even small amounts of money from a particular asset at the wrong time can result in a major tax bill. So here’s the good news: You can start planning now to take advantage of tax strategies that will lessen the impact of taxes on your vision for retirement. A tax strategy advisor who specializes in retirement planning can help you achieve this.

Why Tax Planning In Retirement Matters

When you retire, your income sources are likely produced from a variety of assets, including employer-sponsored retirement plans, Social Security, personal IRAs, or other income-generating investments. Each asset has different tax characteristics, and properly structured investments can help lower your tax burden if you plan how and when you’ll withdraw from each.

For example, most people will receive Social Security benefits during retirement, but 85% of your Social Security income can be taxed at your regular tax rate if your income exceeds a certain amount. (1) A tax strategy advisor can help you determine how Social Security will fit into your overall plan and structure your other investments to alleviate the tax burden on Social Security income.

And when it comes to your personal savings, a $50,000 withdrawal from a Roth IRA will have a wildly different tax impact than that same distribution from a traditional IRA. If you blindly take your money and run, you could trigger an avalanche of higher Social Security taxes, investment surtax, capital gains taxes, and even higher Medicare premiums, which will eat away at the funds that were supposed to carry you through retirement. Creating a tax plan can help you avoid these financial pitfalls. 

Speak with a financial planner or tax advisor about creating a tax-efficient distribution strategy for retirement. This professional can look at your tax bracket, retirement accounts, and Social Security to help you withdraw money in the most tax-efficient way. 

Do You Need A Tax Strategy Advisor Who Specializes In Retirement?

A professional who is experienced in retirement tax planning can look at your tax bracket, retirement accounts, and Social Security to help you withdraw money in the most tax-efficient way. You should consider partnering with a retirement tax strategy advisor if:

  • You have multiple retirement investments that generate taxable, tax-deferred, and tax-free assets.
  • You need to strategically bunch tax deductions due to changes in standard deductions under the Tax Cuts and Jobs Act.
  • You’re interested in minimizing your lifetime tax liability.
  • You have a substantial portion of your retirement savings in tax-deferred accounts.
  • Your modified adjusted gross income as an individual filer exceeds $34,000 per year or $44,000 as married joint filers.  
  • You want to minimize your Medicare premiums caused by income-related monthly adjustment amounts for high-income earners. 

Retirement tax planning should start well before you actually retire so you’re taking advantage of tax-deferral opportunities and tax-efficient investing. Instead of worrying if you’ve simply saved enough money to be comfortable, a tax strategy advisor who specializes in retirement can help you unlock the retirement of your dreams by finding opportunities to reduce your tax burden.

Partner With Us

At Wallace Hart Capital Management, we take a comprehensive approach to wealth management. Rather than providing you with only investment advice or portfolio management, we help you with all areas of your financial life so you can feel confident that your financial future is secure. If you would like to learn more about how we can help you plan for retirement, contact us at 859.300.3030 or request an appointment online today!

About Jeremy

Jeremy Wallace is founder and chief investment officer at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Jeremy has 20 years of experience in the financial industry and is passionate about helping clients preserve and enhance their wealth so they can pursue their passions. Jeremy graduated from Emory University with a degree in international economics and a certificate in financial planning. Outside of the office, Jeremy spends most of his free time with his wife, Julie, and their three children, Isabel, Lincoln, and Reid. He is an avid Chicago Cubs baseball fan, and  he enjoys golfing with his wife and traveling with his family. Learn more about Jeremy by connecting with him on LinkedIn.

About Andrew

Andrew Hart is the co-founder and chief planning strategist at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Andrew has 15 years of experience in the financial industry and strives to provide new and better strategies and processes to improve his clients’ lives. Andrew graduated from Wittenberg University with a bachelor’s degree in business management and holds a certificate in financial planning from Georgetown University and the CERTIFIED FINANCIAL PLANNER™ designation. When he’s not working, you can find him enjoying the city of Lexington, KY and spending time with his wife, Susan, twin sons, George and Ted, and daughters Merritt and Philippa. To learn more about Andrew, connect with him on LinkedIn.