Every April, millions of Americans sit down with their accountant or CPA to prepare their taxes. They gather receipts, review deductions, and file their returns.
But here's the problem: by the time you're preparing your taxes, what's done is done. You're just reporting history.
Smart retirees take a completely different approach. They focus on tax planning, rather than just tax preparation.
Tax preparation looks backward. Tax planning looks forward.
Tax preparation is what you do every year with your accountant. They help you prepare and file your taxes, but aside from some obvious deductions that might save you a few bucks, you're simply documenting what already happened.
Tax planning is altogether different. Here you're looking ahead, using tax law to your advantage, and finding opportunities that could help you save a fortune in taxes throughout retirement.
During your working years, you have limited control over your taxes. Your employer withholds taxes from every paycheck. Your investment options are often restricted to what your 401(k) offers.
But in retirement? You have more control over how much you pay in taxes than at any other time in your life.
The catch is that this control doesn't happen automatically. You have to take action.
Consider what happened to a couple who walked into B.O.S.S. Retirement Solutions with $2.3 million saved for retirement. They were excellent savers who had done everything right - or so they thought.
The husband was so confident in their situation that he only came to the meeting because his wife insisted he should. He saw it as just checking a box because he didn't feel they needed any help.
Once the conversation began, however, a serious problem emerged. Nearly 100% of their $2.3 million was in tax-deferred IRAs and 401(k)s. They had very little savings in after-tax accounts.
This couple thought their $2.3 million was all theirs. But they had an unwanted silent partner who wanted their share: the IRS.
Since they had to withdraw a significant amount each month to support their lifestyle, and because all withdrawals would be taxed as ordinary income, they would be forced into a higher tax bracket. This created a massive tax obligation they hadn't anticipated.
After running the analysis, the shocking truth emerged: they were on track to run out of money by age 73.
They were absolutely floored because they never saw this coming. Like many Americans, they focused on accumulating money without considering the tax consequences of spending it in retirement.
If this couple had continued working only with their tax preparer, nothing would have changed. Tax preparation couldn't solve their problem because:
The damage would already be done each year before the tax return was even filed.
Tax planning takes a completely different approach. Instead of reacting to what happened, it helps you control what will happen.
For the couple with $2.3 million, tax planning opened up several possibilities:
Because there was still time to implement these strategies, they could dramatically reduce their lifetime tax burden.
Consider Bob and Carol from B.O.S.S. Retirement's book, "The B.O.S.S. Retirement Blueprint." They had saved over $1 million for retirement but discovered they would owe more than $500,000 in taxes on their IRA alone.
Their tax professional had always told them to continue deferring their taxes until they reached age 72, when Required Minimum Distributions begin. This was classic tax preparation thinking - delay taxes as long as possible.
But when B.O.S.S. Retirement ran a forward-looking tax analysis, they calculated exactly how much Bob and Carol could owe at current tax rates, which will likely be higher in the future. That number was shocking.
The solution wasn't found in better tax preparation. It required tax planning that looked ahead and implemented strategies to reduce their lifetime tax burden.
Some people think tax planning is only for wealthy individuals. That's simply not true.
If you're the kind of person who needs to make the most out of every dollar saved for retirement, you should take advantage of tax planning. The savings could result in tens of thousands, if not hundreds of thousands, of additional dollars in your pocket instead of the IRS’s.
This is what many call the "needle mover" in retirement. Tax planning isn't a one-time event. As tax rules change and Congress proposes new legislation, you need to work with a professional team to ensure you're getting the most out of every dollar saved for retirement.
Unlike tax preparation, which happens once a year, tax planning is an ongoing process. It involves:
The government's spending continues to increase, creating pressure for higher tax rates. Politicians constantly write new laws to fund operations and address the growing deficit.
In this uncertain environment, you can't afford to just react to tax changes after they happen. You need to plan ahead and take control of what you can control.
Don't wait until retirement to start thinking about taxes. The earlier you begin tax planning, the more options you'll have.
B.O.S.S. Retirement Solutions offers a free customized tax savings analysis that goes far beyond simple tax preparation. They'll examine your entire situation and identify strategies that could save you tens of thousands, if not hundreds of thousands, of dollars in retirement.
The analysis includes:
Tax preparation tells you how much you owed last year. Tax planning shows you how to keep more of your money for the next 20 to 30 years of retirement.
If you've saved at least $300,000 for retirement, call 800-637-1031 to schedule your free tax planning analysis with B.O.S.S. Retirement Solutions or click here to get the report.
Remember, it's not what you make, it's what you keep. And tax planning is the key to keeping more of your hard-earned retirement savings.
A tax preparer focuses on filing your annual tax return based on what has already happened. A tax planner looks ahead and develops strategies to minimize your future tax obligations across multiple years.
The earlier, the better. Ideally, you should begin tax planning in your 50s, but it's never too late to start. Even retirees can benefit from strategic tax planning.
The savings vary based on your situation, but it's not uncommon to save tens of thousands or even hundreds of thousands of dollars over your retirement years through proper tax planning strategies.
Yes, you'll still need someone to prepare your annual tax returns. Tax planning and tax preparation work together - planning shapes your strategy, while preparation executes the annual filing requirements.
While that’s possible, retirement tax planning involves complex strategies and an intimate knowledge of the constantly changing tax laws. Working with professionals who specialize in retirement tax planning typically yields better results and helps you avoid costly mistakes.
Your retirement years should be about enjoying the fruits of your labor, not worrying about an ever-increasing tax bill. The difference between tax preparation and tax planning could mean the difference between a comfortable retirement and running out of money too early.
Take control of your tax future. Call 800-637-1031 to schedule your complimentary retirement tax planning analysis with B.O.S.S. Retirement Solutions, or click here to access the report. Your future self will thank you.
The Framework for a More Confident Retirement
Designed to deliver simplified, personalized financial strategies, the B.O.S.S. Retirement Blueprint™ planning process helps maximize income, growth and legacy while minimizing taxes. Ready to view your retirement from a new angle?
