An Updated Approach to Tax and Retirement Planning for 2025
By: Bruce D. Bullock, J.D.
It’s tax season! A “micro” approach to better tax planning is to look for little loopholes or investments to reduce taxes and add to retirement savings. But why? In fact, we interviewed 250 local taxpayers 60-82 years old and all with 401k, 403b or IRA savings looking for “IRA tax tips.”
How many had even used these accounts for income prior to age 70 ½ or now age 73? Six. The fact is, people who have saved for 50-60 years are not about to spend their savings!! They like looking at a big number but don’t want to touch hundreds of thousands and in some cases millions of dollars in “savings." Not one of the 250 retirees had a written, guaranteed retirement income plan!
There are four reasons for this refusal to enjoy retirement savings:
People fear “running out of money."
They fear market losses.
They don’t like paying 1/3 of every withdrawal in taxes. It takes $3,000 of IRA money to take a brief $2,000 vacation. And with other sales taxes and fees, it takes $100,000 to buy a $60,000 electric car to save on gas!
They are afraid of the cost of contracting a prolonged illness.
Is there a solution to all these concerns? Certainly since interest rates more than doubled in the last 2-3 years, there are solutions that never previously existed.
If your principal were protected and guaranteed, would that help?
If you knew your balance could never decline, would you be more likely to use the money?
If the income you took were guaranteed to both spouses for life, would that help?
If the income continued even if you “ran out of principal” and increased every year you were alive, would you perhaps start an income?
If the income doubled should you require long-term care, would that help you enjoy the years more when you are healthy?
If the carrier provided an initial bonus of 33% to 50% and paid the bonus balance more than you were taking in the income, enough to offset all the taxes you would owe, would you prefer your income to be tax-free and pass tax-free, eliminating the unpopular RMD at age 73?
The “macro” view, the “big picture” is that since 2023, all of this is available. Just as you insure your home, your car, your health and your belongings, one account with some of the world’s largest financial institutions offers all of this for retirement funds that produce income now, more later and twice as much for catastrophic illnesses.
If you haven’t heard this from your current “advisor” or CPA, hear it from a tax-attorney, tax-strategist. The information is free. Whether you act on it can change your entire financial future.
And finally, what if you are years, even decades from retiring? Does it make sense to you to form a partnership with the IRS and Franchise Tax Board (IRA, 401k, etc.) with all your savings for the rest of your life when all you want is tax-deferral and safe growth?
These same institutions can give you that and current access to almost all of your retirement funds at any age without even involving the government or market risks. Your “macro” view may involve 25-75 years! Just ask and learn how to take control of your own retirement plan now.