Tax Planning For Retirement: Why It Matters From Fiat Wealth Management

Managing wealth a er retirement is a big deal, and a large and o en overlooked part of that process is planning for taxes. At Fiat Wealth Management, one of their main focuses is on helping people manage money a er retirement, and taxes are a huge part of that. As they explain, no matter how or where that money is saved and stored, taxes will need to be paid on it and it can be one of the biggest bills a person ever gets in their life.

Tax planning is tal, and an area that is o en not talked about when it comes to long-term financial planning for retirement. Many people will come into retirement, with a decent portfolio of investments and sa ngs, and not realize how much taxes will be affecting their income in retirement. It is an area people do not o en talk about, or get education in, and can be very complicated due to different forms of money and income coming in, and the way they are taxed. Many people are not aware that their investments will be subject to higher rates, capital gains taxes, and taxes that have been put off from pre ous investments.

At Fiat Wealth Management their specialty is working with people who have acquired money for retirement and are now in the position of needing to know how to spend it and maintain enough to live the life they want to. What many people do not consider is that every investment decision is also a tax decision, just as you make an investment, you are choosing to take on a tax debt that may or may not affect how your money is taxed later on. The tax code is very complex, and is inconsistent, constantly changing, and being modified. O en when people get into retirement, they are collecting money from different sources rather than a regular income earned through a job. Social security, insurance payouts, pensions, passive income, all these things are taxed differently. Some count as income, some do not, some come with things like capital gains and a high tax rate.

Fiat Wealth Management will work with clients to delineate how much of the money they have saved is taxed, and in what areas they may see significant impact. They refer to this as a three-bucket system:

Pre-tax bucket – This includes things like 401K, 403B, 457 plans, IRAs, profit-sharing accounts, etc., done on a pretax basis meaning that no taxes are paid, and are put off to pay later, at an unknown tax rate and time. These do not mean there are no taxes, they are simply being addressed at some future point in time.

A er-tax bucket – This is money that people have in checking and pay taxes on, they choose to put into an investment like a money market account, CDs, taxable brokerage accounts, and Roth IRAs, etc. This type of investment will still incur a tax bill, capital gains taxes, and more. These types of investments are taxed as income as if it is earned currently, and there will be state and federal taxes to pay. everyone takes some.

Tax free- These are investments like indexed universal life insurance policies, municipal bonds, health sa ngs accounts, 529 college sa ngs plans, and other situations where money is considered tax free.

Fiat points out that you do not want to run out of money when on a fixed income simply because no one explained taxes and tax planning. Everyone has a different situation, so sometimes it makes sense to kick a tax payment off until later, other times it does not. It all depends on the indi dual. Regardless of where a person is, married, single, wealthy, low income, they will owe taxes and understanding that, and planning ahead can make a significant difference in how much money one actually has at their disposal. Decisions made today may have a dramatic effect on the tax bills in the future, so it is important to look at the big picture.

Matt Stahl and Brad Gotto founded Fiat Wealth Management in 2009, with an emphasis on building trust and faith with their clients. They host educational workshops, as well as a podcast “Every Day Is Saturday”, which is also a show on FOX. Connect with them through their website and on social media to learn more about their tax planning ser ces.