I remember last Halloween joking with my kids about the “dad tax.”  Bryan, my oldest, asked, “What’s a dad tax?” “Oh, easy,” I replied. “For every three pieces you receive, I get one.” Needless to say, I’ve soured my children’s opinion on taxes.  

Kids and candy aside, taxes leave a sour taste with retirees also! Here’s a scenario to consider: Joe, age 65, has accumulated $1M in his company 401(k). He is proud of his accomplishment and excited to start withdrawing $3K/month to help cover his monthly hobbies and expenses. Imagine his surprise, however, when his accountant says his “take-home” pay after taxes is closer to $2,400 (once accounting for his pension and other income sources). Since Joe saved on a “pre-tax” basis, he must pay ordinary income tax on every dollar he withdraws. 

That’s not all. If Joe is collecting social security, he could be subjecting up to 85% of his benefits to taxation! He could also be triggering a future increase in his Medicare premiums if he’s not careful.         

A good financial advisor can devise a plan that provides the income you need without overpaying in taxes (or triggering an increase in your Medicare premiums!). Are you prepared to send Uncle Sam his due without leaving a tip? Call us today to review your tax strategy and understand all of your options! 

Travis Cullman, CFP®, CPFA
Senior Vice President,
Southwestern Investment Group
Wealth Advisor, SWIG
136 Concord Road
Knoxville, TN 37934

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Travis Cullman and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional.

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