Retirement Planning & Tax Saving Strategy for a Couple Approaching Retirement
A married couple in their late 50s approached John E. Geantasio, CPA, seeking financial guidance as they planned for retirement. Both were high-income earners and were concerned about how to maximize their retirement savings while minimizing tax liabilities. With retirement on the horizon within five years, they wanted to ensure their financial future was secure, but they also wanted to avoid potential tax pitfalls that could erode their savings.
The couple’s primary concerns were:
- Optimizing Retirement Contributions: They wanted to take full advantage of available retirement accounts but were unsure how to structure contributions to maximize tax benefits.
- Tax Minimization: As high earners, they sought strategies to reduce their current and future tax burden, including tax-efficient ways to withdraw retirement income.
- Legacy Planning: The couple was also interested in ensuring they could leave a financial legacy for their children while managing tax implications of wealth transfer.
Our team at John E. Geantasio, CPA, developed a customized retirement and tax-saving strategy for the couple, focusing on three key areas:
- Maximizing Retirement Contributions: We advised the couple on how to maximize contributions to their 401(k) and IRA accounts, taking full advantage of “catch-up” contributions available to those over 50. By contributing the maximum allowed, we helped reduce their taxable income while boosting their retirement savings.
- Tax-Efficient Withdrawals: We designed a tax-efficient withdrawal strategy, which included converting a portion of their traditional IRA funds into a Roth IRA. This conversion allowed them to pay taxes upfront at a lower rate, reducing the tax burden on future withdrawals and ensuring tax-free income during retirement.
- Utilizing Tax Credits and Deductions: We identified several underutilized tax credits and deductions, including retirement savings contributions credit and charitable giving strategies that allowed them to reduce taxable income while supporting causes important to them.
As a result of our retirement and tax-saving strategy, the couple achieved the following outcomes:
- Tax Savings: Over the next five years, our plan helped the couple save approximately $65,000 in taxes through optimized retirement contributions, Roth IRA conversions, and strategic use of tax credits and deductions.
- Enhanced Retirement Security: By increasing their retirement contributions and converting part of their IRA to a Roth IRA, the couple secured a larger tax-advantaged retirement nest egg.
- Legacy Planning: With a clear strategy in place, the couple was able to plan for wealth transfer to their children with reduced tax implications, ensuring their financial legacy would be preserved.
At John E. Geantasio, CPA, we provided expert financial and tax planning guidance, allowing the couple to confidently move toward retirement, knowing they had maximized their savings and minimized their tax liabilities.