Right now, Americans can make financial choices that encourage short-term and long-term peace of mind. Long before retirement, individuals can smartly invest and plan for success. Strategic action can position spenders to weather the ebbs and flows of the economy.
On a new episode of Smart Money, podcast hosts Kevin Richards and Tony Shore chatted about the timely topic, "Taxes and the Power of When".
Listen to Kevin Richards and Tony Shore's conversation here.
Following COVID-19 Government Financial Relief, Taxation Increase is Inevitable
In response to the COVID-19 pandemic, the United States government injected trillions of dollars into the CARES Act, stimulus checks, and other relief measures. Kevin Richards believes that future taxation increases are inevitable, given the government's need to recover what was spent.
This news may be alarming, but Richards is determined to help individuals financially thrive.
"We want to find a way to make it where our clients are in more control of their taxation," says Richards.
The Three Tax Buckets
Richards breaks down the three categories of taxes: taxable now, tax deferred, and tax never.
"You want to be able to pull from different tax buckets," explains Richards.
Ordinary accounts, such as stocks, are immediately taxed. On the contrary, when people contribute to IRAs and 401k's, they typically do not access their gradually accrued income for years. Nothing is taxed until retirement, when the IRS accounts for every withdrawn dollar.
Tax Diversification is a Crucial Strategy For Financial Protection
According to Richards, diversifying one's taxes is necessary and possible with support. Two promising options are Roth IRAs and cash value life insurance accounts.
Describing the Roth IRA, Richards says, "That's an account where you put money in, and you don't get a deduction on the money going into it. It's already dollars that you pay taxes on. All the growth that occurs on that account is tax free. There's no rules about how much to take out, but there are rules about when you can take it out."
People with existing retirement accounts may also explore Roth Conversion. Richards explains, "That's where you take out a certain percentage or dollar amount from your IRA or 401k, etc. that wasn't yet taxed. You take it out of that account which is a taxable advantage. I don't mind paying taxes now on these dollars when I feel they are going to be taxed much higher down the road. Take the band-aid off now. We know it's inevitable."
Don't Wait, Start Today
Richards and Shore advocate for proactive planning and are eager to support anyone ready to control their taxes.
"The sooner the better because time, we can't get it back when it's gone. Every year that we wait to do this, we've lost that year."
With expert guidance and tax diversification, financial empowerment is possible. There are resources available for individuals seeking agency and support.
KNR Consulting Group is offering free, no obligation consultations on taxation planning to listeners who call the office at (949)218-3900. To get a free copy of Kevin Richards' book Smart Money, schedule a consultation today.
You can also find more information on their website: https://www.knrconsultinggroup.com/.
Listen to KNR Consulting on the Smart Money Podcast: http://radio.financiallytuned.com/knr
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