Written by:
Written by:
“It’s not what you earn, it’s what you keep.” Whoever first uttered those words deserves a statue in the lobby of every financial advisor’s office. Seriously, right next to the complimentary Keurig and the muted TV playing CNBC.
Yes, making money is exciting, and saving it is rewarding, but strategically protecting your nest egg from the IRS is financial wizardry. At EWA, we’ve helped hundreds of successful professionals — particularly physicians, business owners, and executives — navigate the complex maze of taxes.
Like many high-earners, Dr. Tom diligently maxed out his traditional retirement accounts every year, never considering tax optimization beyond taking the deductions. When he retired and was eventually forced to take required minimum distributions (RMDs), he watched helplessly as the government siphoned off over a third of his income. This problem isn’t unique; we see it all the time. Most people focus exclusively on accumulating asset during their working years, with no regard for what happens to those assets in the decumulation phase.
The key concept that savers, like Dr. Tom, tend to overlook is asset location — the strategy of placing specific investments into different account types. Think of asset location like packing for a trip: carefully selecting what goes into your carry-on (Roth accounts), checked luggage (traditional accounts), and backpack (taxable accounts). Proper packing ensures you arrive smoothly at your destination (retirement) with everything you need (savings) and fewer unwanted hassles (taxes).
Traditional (AKA pre-tax) accounts are indeed excellent tools for retirement savings, but the distributions are taxed at ordinary income rates, which — for people with significant assets — can be shockingly high. Roth accounts, however, offer tax-free withdrawals. Folks that have been contributing to traditional accounts may want to think about switching to Roth and/or executing Roth conversions, especially in years when income falls into lower tax brackets. This is asset location in action.
Here’s the big picture: tax optimization isn’t just about saving money for a future need; it’s about saving the right way. Enhanced planning gives you the freedom to retire without the lurking stress of excessive taxes. At EWA, our goal is simple yet powerful: ensure your savings remain robust but also tax-efficient; funding your lifestyle, not Uncle Sam’s. Because when more of your savings stay in your pocket, it feels like winning the long game. And that’s exactly how retirement should feel.
In just 15 minutes we can get to know your situation, then connect you with an advisor committed to helping you pursue true wealth.
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Important Disclosures:
Securities and advisory services offered through EWA LLC dba Equilibrium Wealth Advisors (a SEC Registered Investment Advisor).
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.
EWA, LLC dba Equilibrium Wealth Advisors, is an SEC-registered investment advisory firm providing investment advisory and financial planning services to clients.
Investments in securities and insurance products are not insured by any state or federal agency.
To view EWA’s public disclosure, registration, Form ADV and Part 2B’s, click here.
To view EWA’s Client Relationship Summary (CRS), click here.
In 15 minutes we can get to know you – your situation, goals and needs – then connect you with an advisor committed to helping you pursue true wealth.