Retirees focus too much on investments and too little on taxes, a mistake that can quietly erode nest eggs, said Phil Huff, a partner with Golden Reserve, LLC, during an appearance on Live in the D.
“Most financial advisors don’t talk taxes. They’re spending their time talking about investments,” Huff said. “I don’t know if it’s the retiree overlooking it. I think the industry overlooks a lot of the big issues, especially for retirees and their 401(k)s and IRA accounts.”
Huff urged a long-range tax strategy rather than aiming to minimize only the current year’s tax bill or withdrawing just the required minimum distribution. “We want to have our own plan that’s proactive and that’s kind of taking a step back and looking at the big picture,” he said.
One costly pitfall, he said, is the “widow’s penalty.” As required distributions rise with age, a surviving spouse may “still have to take that money out, but they pay at single tax rates, oftentimes paying twice as much in taxes,” Huff said. He also cautioned heirs face compressed timelines and higher brackets since “the kids pay the tax, they’re paying at their tax rates and they only have a decade,” often during peak earning years. “Imagine not 10, 15% going to Uncle Sam, but potentially 30 or 40%,” he said.
Huff outlined Golden Reserve’s IRA tax plan, which he said can include Roth conversion planning and coordinated withdrawals. “We don’t want to ignore taxes,” he said. The goal, he added, is to “pay the taxes now while we’re in retirement, filing joint at our lower tax rate,” potentially reducing what he called the widow’s penalty and the “kiddos penalty.”
He framed tax planning as one piece of a broader “roadmap” to protect retirement savings, alongside a market risk review, fee analysis and an estate and elder-law plan. “The roadmap’s all about protecting your nest egg, making sure your money is going to you,” Huff said. “Having all of these different services under one roof is how we make sure our plans and our roadmaps ultimately protect retirees.”
To watch the segment, click on the video above. For more information you can also call 313-888-8884 or visit goldenreserve.com
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