Fort Worth Financial Advisor Doing Tax Planning

Basics of Tax Planning for Fort Worth Retirement

Blog

Tax planning is an important aspect of Fort Worth Retirement Planning. Simply put, Retirement Investing is about saving money for a nest egg while we are in our productive years. Ideally, by the time we retire, this nest egg is large enough to generate income that we can live off of in our retirement years. The operative word there is income because income is taxable. Retirement financial advisors have to account for taxes in their financial planning to make sure their clients have enough for their dream retirement life. It is our mission here at Retire Guides to help our clients make smart investment and financial decisions towards making their retired living achievable and enjoyable. To this end, our Financial Planning experts have come up with a short article on the basics of tax planning.

How Will Your Fort Worth Retirement Income be Taxed?

In order to incorporate retirement tax charges to your Fort Worth Retirement Planning, we need to understand the different regimes that apply to the different retirement investment instruments we can use.

  • Roth IRA or Roth 401(K) – Incomes arising from or withdrawals to your Roth IRAs or Roth 401(K) account are tax-free because the tax has been paid when you made the deposit. This instrument is recommended by our retirement financial advisor because the money invested in these accounts grows tax-free.
  • Traditional IRA or 401(K) – These are taxed at the same rate as your income tax bracket. However, because retirement incomes are generally lower than when one is working, retirees are effectively paying lower taxes.
  • Social Security – Depending on your income filing and computation, 50% up to 85% of your social benefits can be taxed while the rest is tax free.
  • Long-term investment such as stock - Capital gains arising from sales of stocks can be taxed up to 15%, depending on taxable income.
  • Municipal bonds – Interests and capital gains from municipal bonds are tax-exempt.

Plan for Your Fort Worth Retirement with a Trusted Retirement Financial Advisor

The tax rates charged on retirement investment income discussed above are just some of the things you have to consider when planning for your Fort Worth retirement. Retirement financial planning is a very personalized process. There are generic retirement investment strategies that can benefit all such as saving more but there are strategies that are more applicable to some than others. Thing is, in order to make the most out of your savings, we need to do the numbers to determine which combination of retirement investment instruments are optimal for your unique situation. Our team of experienced retirement financial advisors can help you navigate this as you journey towards your retirement dream by providing you a retirement roadmap that is customized to your personal goals. Call us now to schedule an appointment and let us make your retirement dreams a reality.