It's a fallacy to think that you achieve absolute security and complete peace of mind, especially with your finances. You can prepare and save huge sums of money only to find out it was enough to cover situation X, but situation Y, the one you hadn't considered, not even close. If the pandemic taught us anything, it's that no industry, business, or our economy is immune from significant disruption given the right circumstances.
That said, there are steps we can take to better address the inherent risk we face in and our lives and especially with our finances, The below list comes from an article by Michael Kay and while I've used these points when providing professional advice, the way they're stated here is unlike how they're normally presented by an accountant or financial planner. I especially appreciate items #2, #4.and #6 as they don't require a degree in accounting or finance to see their importance.
Great bits of (concise) information regarding retirement savings, planning, and mistakes. This information is useful for current or soon to be retirees along with those who plan on retiring someday and require growth in their retirement accounts to do so.
Personally item 1. is the real key as talking to and working with a professional provides a greater chance for success. This is because your much more likley to follow a structured process that can and should help to identify a variety of opportunities & risks. Additionally, a more formal process should have protections in place which help to highlight other issues in a portfolio and management of it.......including steps/ways to avoid items 2. & 3.
1) No written plan - Like small businesses, without a written plan your automatically handicapping your chances for success.
2) Not managing sequence-of-return risk
3) Not taking the right risk
#ramlcpa #tax #taxplanning #401k #IRA #taxsavings #RetirementPlan #retirement #retirementplanning #retirementgoals #RetirementSolutions #robbinhood #retirementincome #taxstrategy
I find that RMDs are one of the least understood & not well-planned tax events in many taxpayer’s lives. At 72, the law requires that most people begin taking ...RMDs, from these tax-deferred accounts (401k, IRA, similar) while easily causing a retiree to pay more in #tax then they should.
The article talks about doing Roth Conversions closer to #retirement, which if done properly can be a very good idea.
However, there is much more taxpayers can do during their careers with Roth funds resulting in far less or no tax. Here's 3 quick strategies:
1. Life's a journey & things happen so in lean years (recession, job loss) a Roth Conversion could be taxed are far lower rates then later.
2. In lean years or years with reduce income due to a life event (unpaid or reduced pay for sickness, injury, maternity, etc.) classify more or all your 401k contributions as #Roth’s (non RMD funds).
3. I'm a huge fan of Back Door Roth’s as there a great way to diversify your retirement & increase Post-Tax (non RMD funds) accounts, all while being able to make contributions beyond the W2 limits.
#ramlcpa #tax #taxplanning #401k #IRA #Roth #rmd #rmds #taxsavings #retirementstrategy
#retirementplanning #retirementgoals #taxstrategy #retirementplan#RothConversion
Travis Raml, CPA