Every Tax Dollar Saved Is A Guaranteed Return

Taxes can be oppressive! Especially in retirement when you’re on a fixed budget. We focus heavily on minimizing the amount of taxes you’ll pay over your retirement lifetime.

Most clients are shocked when we ask for their tax return! Probably because most “financial advisors” don’t bother with tax planning.

This couldn’t be further from the truth for our clients. We’re obsessive about maximizing your retirement money, and minimizing your taxes is an integral part of doing that.

Roth Conversions

Perhaps the most important way we can slash your lifetime tax obligations is through the process of Roth conversions. We use sophisticated planning tools to calculate the optimal amount of your pre-tax IRA dollars to convert into tax-free Roth dollars.

We’re also quite opportunistic about Roth conversions. For example, during the “COVID market crash of 2020” we were feverishly converting shares of beaten down stock mutual funds into Roth accounts where they will grow tax free forever (when used correctly.) This opportunity allowed us to convert more shares at lower prices and will prove to be a massive benefit for our clientele over time.

It’s better to pay small amounts of taxes over a prolonged period while you can maximize your tax brackets than taking massive distributions later forcing you into higher brackets. This process becomes especially important if you’re married as it helps your spouse avoid the “widow-tax” later in life.

Asset LOcation

Every diversified investment portfolio has a broad array of asset classes. Some asset classes are highly tax efficient. Others are horribly tax-inefficient.

Where you put those asset classes can boost your returns up to .75% according to a study by Vanguard. How would you like an extra .75% added to your retirement planning? I’m sure it would be a nice addition to a comfortable and confident retirement.

Tax-Loss Harvesting

While the long-term results for the stock market are overwhelmingly positive, there will always be periods of negative returns. That’s just part of the investment process.

When your investments are beaten down, we review your portfolio for opportunities to sell them locking in a loss for tax purposes. We then select similar—but different—investments to replace them with. Finally, after the wash sale rule period has expired we look at re-allocating back into the original investments.

This process allows you to lock in losses, offsetting up to $3,000 per year of ordinary income, and keeps your portfolio allocated properly.

Tax-Gain Harvesting

Like tax-loss harvesting, tax-gain harvesting can help certain clients in a zero percent tax bracket. Rather than sell investments to lock in a loss, we review your portfolio for selling investments to lock in gains at a zero percent rate.

Tax-gain harvesting reduces your lifetime tax obligations because it resets your cost basis higher with each opportunity.

Tax-efficient Investing

We overwhelmingly believe in a passive—or index—approach to investing. The investments we use are incredibly low-cost and broadly diversified.

More importantly to the tax discussion, is they’re also very low turnover (meaning they don’t buy and sell a lot which generates tax implications.) This low-turnover approach helps reduce your lifetime tax obligations.

Social Security Coordination

Taxes and Social Security have a dynamic relationship in the context of your retirement plan. Up to 85% of your Social Security benefits are taxable.

We work towards maximizing your Social Security benefits, but with a focus on your tax implications. If we can delay your Social Security benefits we have more ability for Roth conversions and other tax slashing strategies.

If You’re Worried About Paying Too Much In Taxes

We should talk if you’re worried about paying too much in taxes. We make slashing your taxes a high priority within your overall retirement plan.