Allon Planning

March 27, 2021 | Reading Time: 2.0 min

Does Tax Planning Really Matter?

Let’s be real, no one actually likes to talk taxes, but it is a reality of our lives as citizens of the United States. You may not consider the importance of tax planning for retirement because you view it as a daunting task filled with tricky details, endless questions, and confusing decisions. Or you may just be unaware of the strategies available to minimize taxes. No matter what your hinderance may be, if you take the time to dig a little deeper, you’ll be sure to find it’s worth your time. Nine times out of ten, you’ll receive the benefits back in your own wallet.

Tax planning in your retirement years holds more importance when you consider just how many factors impact your taxes. For example, you may think “my Social Security is tax-free, right?” Unfortunately, that is not always the case. Some may disregard Qualified Charitable Distributions because they feel it simply complicates their charitable giving, yet you can save tax dollars by utilizing this benefit! Others still think RMD’s (Required Minimum Distributions) aren’t important to discuss because they have been waived in 2020, due to the COVID-19 pandemic. Yet, in order to maximize your money, you must look much further down the road, considering not only this current year, but the years to come.

So, where do you start? The first step is to find trusted professionals to help. It’s important to ensure your financial advisor is a fiduciary, meaning they work for you and your best interests first, and not their own. It’s best to have your financial advisor and your CPA working together on your behalf to ensure your accounts are utilized in the most tax-efficient manner.

In our line of work, we consistently have individuals coming into our office who are over-paying in taxes; yet until we pointed it out, they had no idea. This is due in large part to many simply not being aware of the strategies and tools at their disposal.

That’s where we come in. We know that every dollar we can save our clients in taxes is a dollar earned to them. Holding on to more dollars also means having to take less risk with their portfolio to meet their retirement goals. This makes proper tax planning a massive win for our clients.

The importance of tax planning really comes down to one question: Do you want to overpay in taxes? If not, what are you going to do about it? If your financial advisor isn’t discussing tax planning opportunities, you may be working with the wrong individual. Yes, we recognize financial and tax planning can be a heavy topic to tackle, so let us come along side of you and do the heavy lifting.

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