By understanding the tax basics and working with a professional to create a tax strategy for your retirement, you can put yourself in a better position to achieve the retirement you deserve. It’s important that you consult a CPA before making a decision that involves large tax questions. A CPA will work with you collaboratively to understand the financial ramifications of your big decisions and should run a tax projection for you as well. They can also give you advice on financial missteps to avoid any tax saving opportunities you may have been unaware of.
CPAs can be valuable, but don’t take their investment advice if they aren’t licensed to give it. Taxes may take up about 30% of our overall expenses. As such, a CPA’s advice can make a dramatic difference to your portfolio. After all, it’s more about what you keep than what you make. When it comes to investment advice however, unless your CPA is also a licensed financial advisor, they are not able to recommend specific investment advice. You want to be sure that your investment advisor is credentialed and licensed to receive the best advice possible.
In retirement, tax diversity in your investments is similar to playing a strong card game with the IRS. It allows you the ability to play the right cards at the right time and minimize the total tax burden on your retirement account. Aim to not only have money in the traditional taxable investment like your 401(k), but also in savings accounts and tax-free accounts like a Roth IRA. A trusted financial advisor can help you discover how much you should have in each bucket and help you execute your game plan.
At Madrona Financial, we have a large CPA team on-staff to best serve our clients and their own personal needs. Bring your tax questions to your next retirement review…CLICK to request your appointment now online!