Don’t Pay Too Much in Taxes on Your Retirement Income

In today's exciting article, we’ll simplify a confusing and difficult financial topic. Every week on YouTube and our podcast, we help people understand the principles that lead to true financial independence and the ability to enjoy retirement freedom.

Retirement freedom is comprised of three essential pillars:

1.    Freedom of time.

2.    Freedom of health.

3.    Freedom of wealth.

This is the formula for enjoying a worry-free retirement. Under the category of wealth is a sub-topic that is vitally important to understand: taxes. Without proper knowledge to protect your money, you’ll find your wealth getting sucked down a black hole. Taxes are your largest expense in life. Financial apathy and floating downstream on the rubber raft of life will cost you money. The tragic reality is that most people, after losing their money to taxes, find they could have avoided it with proper planning and partnership.

 At Lord and Richards, we are blessed to be able to offer you the comprehensive planning you need, including tax planning. We not only have Certified Financial Planners, but also an enrolled agent with the IRS who can represent you with the highest credentials. We offer tax planning and tax preparation, which is a big deal for our clients and for you.

Here’s the issue: most people shy away from the topic of taxes. It feels complex and overwhelming, and people want to give up. You may be tempted to fill out a simple form, take a standard deduction, and let sleeping dogs lie. However, I encourage you to meet with us and allow us to help you develop a plan to reduce and eliminate taxes throughout your life.

Estate planning, or end-of-life planning, isn’t enough. Throughout your life, you make decisions on your investments, how you’re being taxed, and your W-4 form that have long-term impacts on you. This is why I highly recommend getting a Retirement Freedom Review™ at Lord and Richards. This includes a comprehensive tax analysis that uses sophisticated software and tools to map out your financial standing. From there, we can implement strategies to reduce your taxes now and in the future.

Here's a simple question to consider: relative to history, do you feel taxes today are high or low? If your gut tells you taxes are high, you’re not alone. Watching money consistently come out of your portfolio and income is a painful process.

I'm a red-blooded American who grew up in a military family. I'm a patriot who loves my country and wants to pay my fair share to cover our defense and regulations to make businesses work across industries. The government has gotten involved in plenty of things it doesn’t need to, but that’s a topic for another day. What I don’t want to do, or for you to do, is to pay more than we should.

While you aren’t alone if you feel taxes are expensive right now, you may be surprised to find that you’re wrong. Historically, we’re in one of the lowest tax environments. After World War II, tax rates were staggeringly high. The top bracket exceeded 90%. Ronald Reagan limited himself to two movies per year when he was acting, because every dollar he earned beyond $200,000 was taxed at a 90% rate! Those tax rates remained well into the ‘60s, and we didn’t see significant tax reform until the ‘70s or ‘80s. Comparatively, taxes are on sale now.

Now what? Typically, when we find things on sale, we buy in bulk and stock up. We mortgage our future to get things cheaper so we're not paying more later. When taxes are on sale, we should do the same thing and take advantage of the current low tax rate environment. We aren’t guaranteed to have this environment forever; we need action by Congress to maintain today’s low rates.

Our job is to find ways to pay taxes now, during a historically low tax environment, rather than waiting and hoping they will be cheap in the future, which is about as unlikely as trying to time the market.

My challenge to you is to act now, before we get into future articles on taxes, the challenges we face, and how to take advantage of the system. Most of you have no interest in becoming tax experts. You already have a job you’re great at and don’t need an additional burden. You may hire a tax preparer to do them for you. However, I want to encourage you to go a step further and get a written tax plan at Lord and Richards. Our team can build this for you and teach you how to implement it. We do the hard work for you and set you on the path to fewer taxes. Pick up the phone, give us a call, and enjoy a complimentary conversation about how to achieve true financial independence.

Investment Advisory Services offered through Lord and Richards Wealth Management, LLC, a Registered Investment Adviser.