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The Top 5 Topics Your Financial Planner Should Be Discussing With You

Updated: Mar 8, 2019

New clients often arrive in our office with questions on topics that have not often been discussed with them previously. From our perspective, these are the top 5 topics every Financial Planner should be discussing with their clients.

1. How is social security taxed in retirement?

Social security is taxed in a very complex manner. In fact, it is so complex there is an entire sheet dedicated to social security on tax forms! However, there is a simplified version that gives you a general idea of how it is taxed. The equation is:

The chart listed below illustrates where you would fall based on provisional income.

Calculating Social Security Income Tax

Social security on its own can be quite difficult to understand. However, your Financial Planner should be able to discuss the ins and outs of how your social security affects your tax status and overall financial future in retirement.

2. What is a RMD (Required Minimum Distribution) and how does it affect me?

A Required Minimum Distribution (RMD) is a required amount that you need to take from your pre-tax accounts beginning in the year you turn 70 ½. These distributions are very important in understanding how to save and how funds are distributed to avoid future tax liabilities. If an investor does not take the RMD, the government will charge a penalty of 50% of the required distribution to the investor. The chart below is the divisor table setup by the IRS illustrating what your distribution needs to be in any given year. Please note this divisor is used to divide all of your qualified accounts. Total distribution does not have to come from each account individually, but can come from one account. The table itself will have the divisor and some instructions:

RMD Divisor Table

3. Distribution and Financial Planning are more important than actual investments.

Many financial advisors do not discuss the fact that effective Financial Planning and distribution are vastly more important than the investments themselves. How and when you get funds out of your retirement plan is far more important than how the investments do inside your portfolio. We know you probably did a double take on that last sentence, but think of it this way: If you get an 8% return year over year but get taxed double that amount when you distribute the investments, is that 8% return really worth it? The investments inside the portfolio do have to work but in most cases distribution planning can be where you make and keep the most of your money.

4. What are their qualifications and how much do they cost?

These are two things that every prospective client of financial advisors should understand. In any industry there are good practitioners and bad practitioners, and the financial advising industry is no different. As an example, a CFP® designation is the gold standard in the Financial Planning world for an advisor. A CFP® has actually completed the coursework required to ensure they have Financial Planning expertise.

5. Medicare doesn’t cover everything.

All advisors should have knowledge of Medicare and what it covers because a long term care event can be very devastating to a portfolio.

Looking for additional information regarding these topics? Contact the experts at Strategic Tax & Retirement:

Strategic Tax and Retirement

2434 Superior Drive NW, Ste 101

Rochester, Mn 55901




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