The Freedom To Choose Your Tax Bill (in retirement)!

(checkout the video of this blog too)

Tax rates are at historic lows right now (Although, I know it might not seem like it).

But these low tax rates (and high income thresholds on the current tax brackets) are set to expire in 2026.

Now, there is reason to believe that the Trump tax cuts may be extended for another 8 years, giving an even bigger window of opportunity to achieve a tax-free retirement (which would be phenomenal), but we still must consider the possibility that we only have 3 years to execute a very worthwhile repositioning of retirement assets (more on this in a moment).

But first, we must realize that the consensus among top financial experts is that tax rates have to go up.

Looking at the current state of our economy that’s pretty much a certainty (which just means that is something we have to address in retirement planning).

Now I hate taxes as much as anybody, but these current tax cuts give us a big window-of-opportunity to pay taxes today on our retirement assets (at historically low rates), helping eliminate our tax liability in the future (in retirement), which makes us completely immune to the risk of rising tax rates in retirement… (here’s a case study I did on what this looks like for a typical retiree)

…. the risk of rising tax rates in retirement just means that your money won’t go as far, and therefore, you will have to deplete your assets much faster!

Simply put, retirement becomes much more expensive, and you are much more likely to run out of money in retirement if you pay too much in taxes!

The good news is that congress has essentially removed the limits on how much money you can convert to a Roth IRA…

The only downside is that to move money to this tax-free retirement vehicle, you have to pay the taxes NOW 😑

But, you have lots of freedom in doing so and there are good reasons to consider doing this…

✅ 1) You have the freedom to choose which tax bracket you pay the taxes in

✅ 2) You get to decide exactly how much you pay now (and how much of your tax liability you want to eliminate in the future too) 👏

The current sweet-spot for a Roth conversion lies in the 24% tax bracket.

The income limits currently allow you to convert an additional $170,000 per year into a tax-free retirement vehicle for an additional 2% in taxes (this is a HUGE opportunity right now)!

Not only can you move a large amount of money into a tax-free environment, but you can completely eliminate your tax obligation in the future (where tax rates will almost certainly be higher), AND you can collect your social security check in retirement completely tax-free if done correctly.

These conversions might seem complex, but they’re pretty straightforward and there are some pretty compelling reasons to begin considering this if you are approaching retirement, or even in retirement right now!

Plus, they allow you to maximize your retirement savings so you can virtually eliminate the risk of running out of money in retirement (which is retirees number 1 concern)!

Now I know the economy doesn’t seem opportunistic at the moment, but trust me, there is a still a lot of opportunity to put yourself in an incredible position at retirement.

And, I can help. 😎