There’s a tremendous difference between tax planning and tax preparation. Effective tax planning can save you thousands, tens of thousands, or even hundreds of thousands of dollars over your lifetime.
TAX PLANNING FOR:
● Capital Gains
● Alternative Minimum Tax
● Estate & Gift
● Generation Skipping
● Medicare (IRMAA)
● Roth Conversions
● Back Door Roth
● Deferred Compensation
● Tax Deferral
Think about it – when your accountant or tax preparer sits down to prepare your taxes they are dealing with numbers from last year. It’s already over and in the books. Nothing can be changed, except for maybe a deduction here or credit there. Their job is to ensure you pay the taxes you owe, in accordance with local, state, and federal tax laws, and no more.
This is a necessary and valuable service but it’s not the same as tax planning. The typical tax preparer simply doesn’t have the time or expertise to provide truly comprehensive, long-term tax planning.
What’s worse is that most financial advisors don’t have the expertise or inclination to provide this service either. In fact, most advisors will tell you straight out that they cannot, and will not, provide tax planning services. (Just as they cannot and will not provide advanced income planning, Social Security, Medicare, risk management, survivor, or estate planning.)
Ironically, most will tell you to seek the advice of your accountant regarding tax planning matters. But as we’ve explained, tax preparation and tax planning are completely different.
Tax planning involves looking down the road at the next twenty or thirty years and taking proactive steps to minimize the amount of taxes you and your loved ones will pay over your remaining lifetime – and perhaps into the next generation.
We’ve yet to meet a single individual who wanted to pay more taxes than what is legally required. Yet most people are doing, and will continue to do, just that, year after year, because they don’t have a comprehensive, proactive tax plan in place. In fact, in my twenty-five years of providing holistic retirement planning services, I’ve yet to see a single person walk through our door with a comprehensive, retirement tax plan.
What does a comprehensive, retirement tax plan look like and what does it do? It evaluates all the critical areas of retirement planning, including investment planning, income planning, healthcare planning, survivor planning, estate planning, and risk management planning, from a tax-sensitive perspective.
The first obstacle to creating an effective tax plan is failing to have all the other aspects of your financial plan coordinated. This is extremely common, as most people have never fully addressed each of these areas of need, or if they have, they have done so separately, so none of their planning is truly coordinated, leaving significant gaps in their planning.
We believe the transition into retirement is the single most important financial paradigm shift most people will make in their lifetime. As such, we believe every single person within five years of retirement should completely re-evaluate their financial planning needs in light of this new stage of life and should transition to an advisor who specializes in providing truly holistic, in-depth, retirement planning services. Otherwise, there will always be major gaps in their planning.
The second obstacle to creating an effective tax plan is finding someone with the expertise and inclination to help you develop a plan. Let’s face it, most so-called financial advisors simply manage investments. That’s how they’re paid. They’re not paid to help you with your tax planning, Social Security, Medicare, survivor planning, or estate planning. So, they don’t. And if they claim to do so, they’re very unlikely to invest the time, energy, and expense to learn all they need to know to do so effectively. Which is worse, not getting advice or getting bad advice?
That’s where we’re different. We believe retirement is a process, not an event. And the retirement years require a completely different approach to financial planning. It must be truly holistic, and it must integrate every aspect of your financial situation. That includes advanced tax planning. After all, taxes will likely be your #1 expense throughout your remaining lifetime. Shouldn’t you have a plan to minimize them?
“The holistic financial plan is an integrated approach to coordinating all key areas of your financial life.”