How to reduce your largest lifetime expense
Tax planning is important, especially in retirement
Good morning,
November is about more then eating turkey and giving thanks.
For many of my clients, November is when we’re having year-end tax planning conversations.
April 15th through October 15th (for those of you who file extensions) is focused mostly on tax prep and compliance. Making sure you file your return and pay what you owe, if anything, accurately and on time.
The last few months of every year - from my perspective, at least - is a great time to turn our attention to tax planning. Because once January 1st rolls around, there’s very little we can do to impact this year’s income taxes.
A few tax planning ideas for you to consider this November:
Do you plan to take any more taxable income out of your retirement accounts before year end?
If so, will it impact your Medicare IRMAA or the taxation of your Social Security?
Have you taken your RMDs for the year?
Did you include your 401k, qualified annuity, or other accounts where RMDs apply?
Do you want to utilize any QCDs prior to January 1st?
Does it make sense to harvest any capital losses in your investment accounts? Or maybe even to harvest some capital gains?
Just beware of “wash sale” rules.
Consider strategic planning around your charitable donations. For example, you can “bunch” several years’ donations together into one year to potentially itemize your deductions (instead of just using the standard deduction).
Should you make the maximum contribution to your Health Savings Account?
This isn’t an exhaustive list, but will hopefully provide a glimpse into the potential tax planning strategies you might consider prior to year-end.
And be sure to click some of those underlined links above to read more about these concepts.
I’ve already had some of these conversations with clients and have more on my calendar in the coming weeks.
If you’re a client and would like to discuss these or any other tax planning ideas before the end of the year, please reach out and let me know.
I’m not an accountant or CPA, so I can’t help you with preparing or filing your tax return.
But I’ve been doing more and more tax planning with clients for the last several years.
Over your lifetime, taxes will likely be your largest expense, so it’s worth investing some time and energy to see if we can get that lifetime expense a little lower.
Isn’t it?
Links & Things
It’s been a while since I’ve shared a Morgan Housel article, and today I’d encourage you to read this one from August, 2021:
There are gems in his article including:
Few things are more persuasive than the opinion you desperately want or need to be true.
Average returns sustained for an above-average period of time leads to extraordinary returns.
Every investor is making a bet on the future. It’s only called speculation when you disagree with someone else’s bet or time horizon.
Statistics and probability are the most relevant but perhaps least-taught maths in schools. They have so many real-world consequences about how people think about everyday risk. And yet.
Any additional thoughts? Suggestions? Feedback?
Hit reply or leave a comment and share what’s on your mind…
Until next Wednesday,
Russ