When most pre-retirees begin preparing for retirement, they often assume their income tax bills will be lower in the future. Which is a fair assumption because if the regular paychecks stop, then the taxes owing should be lower, right? But that’s not always the case.
In this episode, we’re breaking down why that assumption doesn’t apply to everyone and how taxes can quietly sneak back into your life if you’re not prepared. We’ll explain the difference between tax preparation and tax planning, and why filing your taxes once a year isn’t the same as creating a long-term strategy to protect your wealth.
We also discuss why today’s “permanent” tax cuts are not guaranteed to remain in place forever and how rising rates could affect retirees in the years ahead. We also discussed how Social Security and required minimum distributions (RMDs) can impact Medicare surcharges and how much money you actually get to keep from Uncle Sam.
KEY TAKEAWAYS
- The Difference Between Tax Preparation and Tax Planning
- Why Taxes in Retirement Can Sneak Up on You
- How RMDs Can Trigger Higher Taxes and Penalties
- The “Hydra” Effect of Taxes
- How Proactive Planning Helps Keep More of Your Money
SELECTED LINKS FROM THE EPISODE:
INSPIRING QUOTE
- “With the amount of ballooning debt that we have in this country, we need to be on guard for higher taxes somewhere down the road.” – Mike Panico
- “A lot of people don’t know that the higher that your income is, the more you pay for your Medicare.” – Mike Panico
- “Paying taxes to a certain extent is voluntary. If you understand what you’re fighting and you get prepared and you get some expert education and advice, a lot of these things through proper planning are either avoidable or at least you can mitigate some of the damage by taking moves with your money and properly putting it in the right place or taking distributions at the right time so that you can keep more of your own money in your own pocket.” – Mike Panico
- “There is a difference between tax preparation and tax planning. Your CPA, your TurboTax does tax preparation. It’s for the year in the past. A financial advisor is going to be able to sit down with you and help you plan for taxes in the future and hopefully mitigate that burden as well.” – Jessica Panico
DISCLOSURE
Arcadia Wealth Management, LLC (Arcadia) is an investment adviser registered with the U.S. Securities and Exchange Commission (SEC). The information presented in this video is for educational and informational purposes only and is intended for a broad, general audience. It is not intended as, and should not be construed as, an offer, solicitation, or recommendation to buy or sell any securities or to adopt any investment strategy. All investments involve risk, including the potential loss of principal. Past performance is not indicative of future results. Any references to investment strategies, philosophies, or client experiences are illustrative and may not be representative of all clients or outcomes.
Arcadia Financial has a reasonable basis to believe that this content does not include any false or materially misleading statements and presents information in a fair and balanced manner. No portion of this communication should be construed as tax, legal, or accounting advice. Please consult your own tax or legal professional for guidance specific to your situation.
Investment advisory services are provided through Arcadia Wealth Management, LLC, an SEC-registered investment adviser. Insurance products and services are offered through Arcadia Financial Group, LLC, by appropriately licensed agents. Bookkeeping and tax preparation services are provided by Arcadia Tax, LLC. These affiliated entities operate independently but are under common ownership.
