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Considerations Concerning Retirement

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Steven E Miller, CPA PC

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Retirement is often a topic that is set aside as an event in the far future. A subject often avoided and addressed only in the capacity of putting money aside each year. Somehow the investments will take care of themselves as long as you keep funneling wages into the 401k. Sound familiar?

Denial is not just a river in Egypt. How did the date sneak up on you so quickly? Perhaps you were caught by surprise with an unexpected event – a corporate takeover? Merger? Health or family issues? In the game of life, you never know what to expect, what hand you may be dealt. It’s wise to be prepared.

Whether you have been in denial or have been diligent about planning your retirement, surprises will come your way. Are you ready?

As you approach retirement or have entered retirement, what may astound you is the amount of details to be taken into consideration. The amount of money you have put away is not the only factor.

With procrastination comes lost opportunities that could have otherwise been established to help contribute to a more secure and enjoyable retirement. Now is the time to take action.


What is the question EVERYONE always asks when it comes to planning retirement? “Will I have enough money to retire on?

While this is the most common question, it isn’t the most important one. We ASSUME that money will fix all our problems when we retire. Did money fix all your problems before you retired? OK then. Let’s look at this from a different perspective.

Money is a tool. It doesn’t fix your problems but can pave the way for you to get help to fix problems whether that is needing a new car, medical expenses, finding a new location to live in retirement and so on.

Change is Constant

While most of us don’t like change, it continues to surround us. The world keeps getting faster and faster. Do you recall the old saying “Just when I thought I was winning the Rat Race, along came faster Rats?” We are living that reality. Technology is outpacing our ability to cope with the change.

But guess what? Most conventional wisdom related to retirement planning tends to focus on the same old unchanging concepts. One of those is “Your income and income taxes will be lower in retirement than during your earning years.” Danger Will Robinson!

Consider just a few points:

  • We have more than 17 trillion in national debt and the government continues to outspend the tax revenues it brings in.
  • Tax rate trends have changed from the downward trend starting in 1997 to the upward trends we see today. Do you expect income tax rates to go lower or higher over the next decade or two?

Another potential misstep in retirement planning is to ignore or gloss over the effect income and other taxes will have on your retirement.

Potentially the most expensive misstep in tax planning is to ignore the long term and only think about today, last year and this year. Steps you take or fail to take today may prove to be very expensive in later years.

We encourage you to conduct a deeper analysis of your retirement needs and assumptions. Our beliefs and projections on our future tend to be far rosier and positive than our experiences of our recent past. Yet we must plan for the unpleasant. Why? It keeps us safer. It is just another way of saying “Hope for the best and plan for the worst.” 


If you are one of those who pay no attention to taxes and don’t really care what your tax bill is, you can stop reading now. But if you are someone that realizes it’s not so much what you make than what you keep, perhaps you will find what I have to say of some value.

Our federal tax laws are extremely complex. That makes us want to bury our heads in the sand and ignore them. But ignore them at your peril. That can be a very costly mistake.

Let me ask you this question: “Will you have the ability to control your retirement income? Taxes vary widely depending on not only your income but the type of income generated. The following cases have two married couples each needing $150,000 per year in income. But as you will see, their federal tax bills are as different as night and day. 


Joe and his wife Mary receive $80,000 of pension income, $40,000 of Social Security benefits and $30,000 of interest income from CD’s and US Treasury Bonds. Their mortgage is paid off and they don’t itemize their deductions.


Mike and his wife Julie receive $40,000 of Social Security Benefits. Their investments generate $40,000 of qualified dividend income, and tax-free interest of $50,000. They withdraw $20,000 per year from their 401k rollover account.

In both cases, they generate $150,000 of cash from similar types of sources. But how they are taxed is very different.

Joe & Mary’s tax bill is $22,038 on $121,300 of taxable income. Mike & Julie’s tax liability is only $4,151. That is almost an $18,000 difference each year. They need the same cash flow but Mike & Julie have $18k more in their pocket.

Do I have your attention now?


Building awareness is the first step in taking the steps necessary to lower your tax bills for not only this year but for years to come. You must be aware of the issues and develop a strategy to maximize the benefits while lower your tax costs.

The following are some of the items for consideration when you are in retirement, approaching retirement or even when you are years away from retirement:

  • Tax brackets matter. Those who maintain the 15% or lower bracket avoid tax on capital gains and qualified dividend income.
  • Roth IRAs are golden. $1 Million in a Roth IRA is still worth $1 Million after tax. A $1 Million Traditional IRA may be worth only $550,000 after tax.
  • The size of your retirement accounts such as 401k’s, traditional IRAs, annuities, pensions may force you into higher tax brackets. This may be avoidable.
  • The federal government taxes your Social Security benefits when you exceed a minimal amount of income.
  • Your tax-free municipal bonds may be costing you taxes on Social Security benefits.
  • Muni Bond income might be subject to the alternative minimum tax (AMT).
  • As your adjusted gross income (AGI) increases, you may be paying much higher Medicare insurance premiums (twice as much for married couples).
  • Building big retirement accounts sounded like a good idea back when but RMD’s (required minimum distributions) may create an expensive pay back.
  • Did you know you might be able to keep a portion of your retirement account out of the RMD calculation – at least until age 85?
  • Roth IRA’s become a powerful tool in meeting cash flow needs without creating unwanted tax implications and unpleasant surprises. For those with terminally ill spouses, tax planning now may save on both income and estate taxes after the loss of a spouse. There may be a number of actions to take to preserve more assets for the surviving spouse.

Everyone’s situation is different and requires its own unique planning. Even then, the strategy requires adjustments and updates. Here is your opportunity to begin planning now for your future. Will you take that first step? 

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15150 Preston Rd. Suite 210 , Dallas, TX 75248
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