No matter how good the return on your investments is, that return is only
as valuable as the net amount you are able to keep after taxes.
As the old saying goes, "It's not what you make, it's what you keep". For this reason, Atlantic Financial focuses on helping our clients take
advantage of the latest tax strategies and tax savings strategies.
For more information, please watch this short piece on
tax
strategy.
The Reality of the Tax Bite - The REAL Effect of Taxes
Do you know what your tax bracket will look like in 10 years?
While most investors realize that the highest tax bracket has been over
50% many times in history, today many investors forget that historically the
rate has been over 70% many times in American history. For two years
(1943 and 1944) the top tax bracket rate actually topped 90 percent!
Several factors could contribute to increased taxes over
the coming years as the huge generation of baby boomers retires:
In the coming decade, 70 Million Baby Boomers Will Reach the Age of
Retirement. What this has to do with your retirement investments:
- Retirees typically earn less income and therefore pay less in taxes
leaving less of a tax base for the government to work with
- Retirees draw from the system in the form of Medicaid, Medicare,
Social Security and, unfortunately for many retirees, welfare -
causing an increase in expenses
- Retirees typically spend less than when they are working - this
causes a decrease in consumer spending and is harmful to the economy
- The next generation behind the baby boomers, Generation X, only has
a small number of members -
causing the government to have less citizens to tax in order to fund these programs
Given these four factors, do you think taxes will be higher or lower
than the historical average as you draw from your retirement funds?
If you agree that there is a chance that they will be higher than the
historical average, you could find yourself paying as much as 70% in
Federal Income tax during your retirement years. It will be
important to have a good tax strategy in place when looking at your
retirement planning and your financial planning. Do you have a tax
strategy for your retirement plan?
