Christmas Gift

The 8 Year Opportunity Our firm’s motto is “It’s not What You Make It’s What You Keep that Counts.” While most other advisers would like to talk to you about how to make more money on the money that you have we would rather have a different conversation with you:

1) How to maximize the income from what you have and

2) How to pay the least amount of taxes.

With respect to #1 making money in the form of investment returns is somewhat vitally important. For retirees, however, it’s not investment returns but cash flow that is king. Portfolio designs that are built to maximize cash flow can be at odds with portfolio designs whose main purpose is to maximize investment returns.

In this blog we’d like to focus on #2: How to pay the least amount of taxes. In that regard we have a Christmas Gift imbedded in the new tax law. Hardly anyone is talking about this but the 24% tax bracket for married couples now extends all the way to $315,000 in taxable income.

Over the next 8 years prior to the sunset of this tax law, we may see the lowest tax rates ever. This is a huge opportunity to shift more money from taxable and tax-deferred accounts to taxfree before the inevitable occurs. In other words, there has never been a better time to pay taxes than right now!

What is the inevitable? The new tax law promises to be a budget buster. The cost to service our debt is already $277 Billion. That can easily triple or quadruple if interest rates begin to revert to more normal, higher historical levels. Further there has been no discussion about reigning in the budget buster entitlement programs, especially Medicare and Medicaid. By the end of 2025 we project that our government deficit will be much higher than the current $20T. By that time all Washington must do is nothing and individual tax rates will automatically go up. And how good are the politicians at doing nothing? You know the answer. However they can only kick the can down the road so far before they will be forced to cut expenditures or dramatically increase taxes or both.

So take advantage of these tax rates now before the you-know-what hits the fan.

If you would like to revisit your pro-active tax planning give Jerry a call on his cell, 732-688-8989.

Best Wishes for the New Year.

Jerry Iacangelo

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