Crafting a New Retiree’s Tax Strategy

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Retirement is the most important goal clients discuss over the course of their professional relationship with advisors. One key piece is the way in which taxes are paid. Crafting a strategy makes this incredible transition much easier for your clients.

As financial advisors, and not tax advisors, we do not need to dive too deeply into the weeds of tax planning. Rather, our goal is to take a high-level approach, proactively adding value to our client’s financial lives and steering them in the right direction.

For simplicity, I am going to use a hypothetical client example. Let’s assume our client is a single woman and program manager at a fortune 500 company, currently making $300,000 in annual salary with no other sources of income. We will talk about taxes at the federal level since state taxes widely differ across the country.

This is a major transition

The switch from employment to retirement income will be the biggest transition in our client’s financial life. She had grown familiar with receiving consistent biweekly paychecks, distributed by her employer, for the better part of her working life. No matter what strategy we use to replace this, this is going to be a major adjustment.