Is Your Investment Strategy Tax Efficient?

Randall J. Richard
Monday, October 21st, 2019
Posted in: Financial Planning
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When you’re completely focused on your career or managing your business, you might lose track of your retirement planning goals. But to achieve the retirement you’ve been dreaming about, you need a comprehensive investment strategy that includes retirement savings and tax advantages.

Learn the strategies you need to consider to minimize your personal tax burden and invest enough for your dream retirement.

Form The Right Investment And Retirement Planning Team

You may be an expert at managing your career and running your business, but when it comes to making the decisions to help you meet your financial goals, you need the right people around you. Your investment and retirement planning team should include:

  • An expert tax professional

  • An estate planner

  • A financial advisor

Keeping track of changes in investment markets and tax laws is a full-time job. You simply don’t have enough time in your day to be aware of every change. This team helps you keep track of these ongoing changes and assists you with developing different investment strategies for both your long- and short-term goals.

You should sit down with your team at least once a year to analyze potential tax savings opportunities. In this meeting, you and your team can develop an action plan to implement.

Maximize Your Tax-Advantaged Retirement SavingsContributions

Many high-income earners, especially those who own businesses, are contributing too little or nothing at all to retirement accounts such as 401(k) plans. If you own a business, your employee 401(k) plan is not just for your employees. It’s for you as well.

When you maximize your tax-deferred savings, you keep more of what you earn and build up your retirement accounts to help achieve the lifestyle of your dreams. It’s important, as you get older, to increase contributions to your retirement savings plans, ideally to the legal limit.

Typically, every year the maximum an individual can contribute tax-free to a 401(k) plan increases, often between $1,000 and $1,500. Talk to your professional tax advisor and financial advisor to make sure you increase your contributions as the limit increases.

Additionally, once you reach the age of 50, you’re able to contribute an extra $6,000 per year tax-free to your retirement savings account. Not only does this further limit your personal income tax exposure, but it also helps build up your retirement savings account to the point it needs to reach to help you achieve your comfortable retirement.

When you’re too focused on the present, it’s easy to ignore the future. Your dream retirement depends on comprehensive investment strategies throughout every stage of your career.

By including tax-advantaged retirement investments as part of your plan and your portfolio, you’re more likely to meet your financial goals and achieve your dream lifestyle sooner.