With the calendar flipping to the second half of the year, a local financial advisor is urging retirees and near-retirees to stop waiting for January and start planning now.
Joe Vitale, owner and investment advisor representative with Vitale Wealth Management, says the mid-year window is one of the most strategic times to review tax withholdings, Social Security timing, and Roth conversion opportunities - before costly mistakes lock in for the year. “Taxes are a big part of our strategy. We really want to plan and make sure we optimize the brackets and reduce their taxes.”
Pull your documents first
Vitale recommends clients start the checkup by gathering last year’s tax returns, 1099s, 1099-Rs, Social Security statements, and recent bank statements. The goal is to understand not just income, but cash on hand - because an unexpected IRA withdrawal to cover an emergency can push a retiree into a higher tax bracket without warning. “You can’t just take chances, you know, just say, oh, we’re going to be okay, because then all of a sudden if it’s too high, your Social Security, your Medicare premiums will go up as well,” Vitale said.
Don’t take Social Security advice from your neighbor
One of the most common questions Vitale fields is when to claim Social Security. The conventional wisdom - wait until 70 for the 8% annual bump - isn’t always the right answer, he says. Instead, he runs a Social Security maximization analysis and plugs the results into a 30-year financial roadmap for each client. “I don’t care what your neighbor says. Let me run your specific scenario and I’ll show you what that’s going to be.”
The Roth conversion window is open - but closing
Vitale is bullish on Roth conversions for retirees who are currently sitting in a low tax bracket. He points to the current environment as a rare opportunity. “We are in the lowest tax bracket we’ve ever seen,” he said. “If we can optimize up to $120,000 on a married filing jointly and pay tax at 12% and convert that to a tax-free bucket of money - oh my gosh, it’s so good.” Most retirees will leave money to their children, who are likely in a much higher tax bracket. “Their kids are in a 30% tax bracket and they’re in a 12, and they got to take it over 10 years. So if we can optimize it strategically, smartly in a low tax bracket, and leave the money tax-free - that’s less money that goes to the government.”
Moving to a no-income-tax state? Timing matters.
For clients considering a move to states like Florida that carry no state income tax, Vitale says mid-year is the right moment to make the switch - but only if the move is done correctly. “If you’re going to move to a state with no income tax, do it mid-year for sure,” he said. “Make sure you establish residency, get your driver’s license changed, do everything you’re supposed to do.” Waiting until year-end means paying Michigan’s 4% income tax for the full year.
Vitale Wealth Management offers complimentary consultations for retirees and near-retirees. More information is available at VitaleWealth.com.