Retirement Tax Filter

Working In Your Best Interests

Tax-Efficient Wealth Management Planning

Our comprehensive wealth management approach includes evaluating your composite income sources against your tax liability landscape. Through this inclusive perspective, we can best determine your tax situation and provide you with strategies that may help minimize your tax obligation, such as yearly tax-loss harvesting to offset taxable gains.

The goal is to minimize your taxes, so you have more money to do the things you want to do in retirement. We do this by turning on and off flexible sources of income, including retirement accounts, return of basis, interest and dividends, capital gain/loss, pension and Social Security, and earned income.

Pre-Retirement vs. Post-Retirement Taxes

One of the main questions people have as they near retirement is, “How will I get paid once I stop working?” We help clients create a sustainable stream of income that will last for several decades and keep up with inflation. Minimizing taxes is a key part of achieving that goal of sustainable cash flow.

It may sound counterintuitive, but people typically overestimate their tax liabilities in retirement. Income taxes may be quite a bit less than you experienced during your working years, even if your standard of living remains essentially the same.

Prior to retirement, you can do a few things to reduce your tax burden, such as retirement contributions and charitable giving. But, for the most part, you don’t have much control over your tax burden during your working years.

However, effective planning can give you much greater control over taxes in retirement. This is because there are several different buckets of money to pull from, and each has its own type of tax treatment. And, for many of these, you can turn them on and off depending on the tax implications of your personal situation.

How the Retirement Tax Filter® Works

The Retirement Tax Filter® is an interactive tool that we developed to help you manage your portfolio and make the most of your money by optimizing income while minimizing taxes. One of the goals of the Retirement Tax Filter® is to help you maximize your lower tax bracket income without creeping into higher tax brackets.

At Brown and Company, we consider your various sources of income: retirement accounts, return of basis, interest and dividends, capital gain and loss, pension and Social Security, and earned income. These are different pools of money and each has its own type of tax treatment.

The Retirement Tax Filter® helps us see how to strategically pull from each of the various pools to create the most tax-efficient income. These concepts might sound complicated, but the tool is extremely intuitive. By turning on and off your different buckets of money, you can see increases or decreases in the amounts of income generated.

Consider the following points:

  • While withdrawals from retirement accounts funded with pre-tax dollars are subject to ordinary income tax, they can be delayed until age 70-1/2 if you have other available income sources.
  • You may choose to incorporate tax-free sources of income, including withdrawals from Roth IRAs, municipal bond interest or return of basis from investments, that have already been taxed.
  • Interest, dividends and capital gains create their own forms of tax treatment, which are generally lower than ordinary income tax rates.
  • Social Security benefits can be taken early, at age 62, delayed until age 70 or taken at any time in between, and some pension plans let you determine when to take your benefits.
  • Our tool allows you to clearly see and understand the estimated tax impact of each decision. We work closely with our clients’ CPAs to implement tax-efficient strategies in retirement.

Brown and Company’s Jargon-Free Approach

We have always been amazed by the ridiculous complexity of the investment industry. Financial jargon, confusing acronyms and “back-stage” jargon are commonplace across the wealth management space. Our approach at Brown and Company is exactly the opposite. We bring clarity and simplicity to a complicated subject, and the Retirement Tax Filter® is one of the ways in which we do that.

Get in touch and schedule your consultation today.