Long and Short-Term Tax Planning

Financial planner Darcy Bergen advises clients in regard to wealth management issues. A Certified Retirement Financial Advisor, Darcy Bergen works to increase the after-tax income of his retired clients. 

To reduce a retiree’s tax burden, retirement tax planning must consider how annual withdrawals, income from benefits, Social Security, and new tax laws intersect. Long-term tax planning usually starts at the beginning of the year and reviews all possible withdrawal timetables to keep clients in the lowest possible tax bracket while maintaining their preferred standard of living. 

Long-term tax specialists may encourage their clients to generate investment returns from stocks rather than certificates of deposit or bonds. This is because returns from bonds and CDs are taxed at a higher rate than dividends from stocks. Additionally, any capital losses can be used to offset taxes owed on capital gains. 

Short-term planning estimates the tax burden at the end of the year based on relevant tax codes. For example, clients will work with retirement planners to determine the best time to withdraw from IRA or 401(k) accounts in order to reduce the client's overall tax liability.

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