Retirement Income Reality Check by Fulbright Financial Consulting PA
With stocks hovering around an all-time record high, a growing likelihood of a Federal income tax rate hike by 2021, and the deadline for end-of-year tax tactics closing in fast, this is a timely reminder to run a reality check on your retirement income plan.
An unusual confluence of tax, financial-market and political factors make this a particularly good time for high-income and high net worth individuals to check their retirement income plan. Let’s get specific about current conditions:
In 2019, the federal government is spending a trillion dollars more than it collected in revenue, and at the end of 2018, the national debt totaled $22 trillion Meanwhile, changing political winds could sweep in higher federal tax rates. Managing your tax bracket now — in case of a hike in federal income tax brackets — could lower your tax bill, not just for 2019 but in the year or two ahead, as well.
Proactive tax planning before the end of 2019 may be especially timely for business owners with an interest in a pass-through entity, like an LLC, S corp, or sole proprietorship.
The possibility of higher tax rates, along with the stock market’s recent highs, also present an opportunity for individuals with a concentrated position in a single stock. With the end of the year approaching, this is a good time to consider taking a long-term taxable gain to lower your risk of something going wrong with that company or industry. Who knows? You may be pleasantly surprised by the tax savings to be gained by checking your retirement income plan under current tax, financial and political conditions.
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