Thinking that your tax preparer is also a tax planner is a very common mistake and it's one that can cost you each year. Does your accountant call you up in May to schedule a time to sit down with you to review your tax return, line by line, to make certain that you are taking advantage of every tax opportunity you can? James Byrd from Safe Harbor Financial Services says If your accountant does that then don't ever let them go!
Byrd says typically you should see a tax preparer once a year, during tax season. But you should ask yourself, is tax season the time to do much tax planning? He says at that time of year, your accountant is simply doing his or her best to get the returns out of the door!
Tax planning is a job for a financial adviser, not the accountant although they do work together for the best benefit. There are areas on a tax return where people may be paying more to the IRS then they have to and your financial planner together with our accountant can point those out.
You might not realize you can be taxed on income you don't even have. It's called "Phantom Income Tax" and it's not a common tax. It manifests itself in such investments as Limited Partnerships where earnings are taxed but not actually received as well as some "zero" bonds. The interest on those bonds is credited to the taxpayer without a check ever being cut. It's the same with some municipal bonds, and as you know, they were supposed to be tax free.
How about taxes on your non-retirement accounts or Social Security Income? These too are subject to Phantom Income Tax. You can actually look on your tax return and see where this is.
Are you still investing as though you're still working? Just 15 years ago 401(k) plans were widely embraced. Workers enjoyed managing their own money, believing that 10% annual returns for life would be enough. Employers were happy to match contributions, giving them the opportunity to shift away from costly traditional pension plans.
Now it all looks like a big mistake. Too many people don't contribute enough, don't diversify and don't repay loans from the plans; too many take early distributions and try to time the market. Times and circumstances have changed and for the first time in a long time it's time to take a look at your retirement. What was once appropriate for building a portfolio may no longer be appropriate now especially now that you want to preserve your nest egg.
If retirement marks a fundamental change in our life, shouldn't the way you invest change as well? Going from one mutual fund to another isn't the answer. It's like buying the same model car but in a different color. Now is the time to look at your investments and future investments in a whole different light.
Retirement marks a new chapter, a beginning, if you will to your life, it's not the endpoint. Whether you're starting a new career, traveling or just spending more time with family, being retired means doing the thing you want to do and what makes you happy.
If you're like many people, the closer you get to retirement the more anxious and even more fearful you can get. Will your assets last and will you be able to maintain your standard of living once you stop working? Have you planned the best you could? If you're not on track for your retirement you could find your nest egg dwindling down to nothing. What would you do then?
Nothing is scarier then the prospect of running out of money during retirement that is why this would top our list of mistakes retirees make. Don't run out of money before you run out of life.
Jim offers a free comprehensive financial review of your portfolio and a free copy of his DVD or book, The Ultimate Success Secret. You can get more information when you email Jim Byrd at email@example.com or when you call 1-877-251-1984.
James Byrd has 30 years of experience, is Top of the Table of the Million Dollar Round Table, and a member of the Better Business Bureau and the National Ethics Bureau. Safe Harbor Financial Services has been awarded Small Business of the Year 2012 for South Eastern Alabama by the Easter Shore Chamber of Commerce.
Safe Harbor Financial Services
9056 Merritt Lane
Daphne, AL 36526
866-251-1984 or 251-625-1226
Hours: Monday - Friday: 8:00am - 5:00pm
You can visit www.safeharfin.com for upcoming events or listen to James Byrd Tuesday's at 10:05 am on on WABF, 1220 AM, and on Talk FM 106.5 on Sunday's at 6:00 pm. You can also see him every other Thursday morning between 8:00 am - 9:00 am on Studio10.
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