Perspective for your financial life.

Why Your Tax Bracket in Retirement May Surprise You

Most people spend their working years assuming retirement will bring a lower tax bill. For disciplined savers, the reverse is often true.

The conventional wisdom goes like this: in retirement, your income drops, so your tax rate drops with it. For someone who saved little, that may hold. But for the diligent saver who spent decades filling a 401(k) or traditional IRA, the picture is very different.

Every dollar in a tax-deferred account is a dollar you have not yet paid taxes on. You received a deduction when you contributed, and in exchange, you agreed to pay taxes later, at whatever rate exists when you withdraw. In effect, you are in a partnership with the government, and the government reserves the right to set the tax rate.

The forces that push retirement taxes up

Three things tend to raise a successful retiree's effective tax rate:

• Required withdrawals. Beginning at age 73, the IRS requires minimum distributions from tax-deferred accounts, whether or not you need the money. Large balances mean large forced withdrawals.
• Social Security taxation. As your other income rises, a growing share of your Social Security benefit becomes taxable, up to 85 percent of it.
• The direction of tax rates. Today's rates are low by historical standards. With significant national debt, many believe rates are more likely to rise than fall.

What to do about it

The good news is that this is a planning problem, and planning problems have solutions. Balancing where your money sits across taxable, tax-deferred, and tax-free accounts, and doing so in the years before withdrawals are required, can meaningfully reduce the taxes you pay over a retirement. The earlier that work begins, the more options you have.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

The Three Tax Buckets, and Why Most People Are Unbalanced

Where your money sits matters as much as how much of it you have. Understanding the three tax categories is the first step toward keeping more of what you earn.

At Gurman Wealth Management, one of the first things we help clients see is that not all savings are created equal. Money can generally be organized into three buckets, each taxed differently.

Bucket one: taxed now

This includes checking, savings, and brokerage accounts. The money is flexible and available at any time, but its growth is taxed every year, through interest, dividends, and capital gains. It is useful for liquidity, but inefficient as a place to build long-term wealth.

Bucket two: taxed later, at an unknown rate

This includes 401(k)s and traditional IRAs. You get a tax break when you contribute, and the money grows without annual taxation. But every dollar you eventually withdraw is taxed as income, at future rates you cannot control. Most Americans hold the majority of their retirement savings here.

Bucket three: taxed never

This includes Roth IRAs and other tax-advantaged vehicles. You contribute after-tax dollars, and in return, the growth and the withdrawals are free from federal income tax. There are no required withdrawals during your lifetime on a Roth IRA. This is the bucket most people have the least in, and often the one that deserves the most attention.

The goal is balance

Having all three buckets gives you flexibility to draw income in a way that manages your tax bill year by year. Most people arrive at retirement heavily concentrated in bucket two. Thoughtful planning gradually shifts the balance, so you are not left with a large, deferred tax liability and little control over when it comes due.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Protecting Wealth Is as Important as Growing It

In the years approaching retirement, defense matters as much as offense. A single setback late in life can be difficult to recover from.

Much of the financial industry is focused on growth: rates of return, market performance, beating a benchmark. Growth matters. But for families approaching or in retirement, protecting what has already been built is often the more urgent priority.

The reason is time. A younger investor who suffers a loss has decades to recover. Someone within a few years of retirement does not. A market downturn, an unexpected lawsuit, or a large uninsured expense at the wrong moment can undo years of careful saving.

What asset protection considers

A protection-minded plan looks at the risks that could erode wealth, and puts structures in place to reduce them:

• Exposure to market declines close to or during retirement, when there is little time to recover
• Liability risk, particularly for business owners and professionals
• The cost of a major health event later in life
• Liquidity, so that a short-term need does not force the sale of long-term assets at a bad time

A complete plan does both

Growth and protection are not opposites; they work together. The aim is to continue building wealth while making sure that a single unexpected event cannot undo the progress. For many families, that balance is what turns a good financial position into a durable one.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

The RMD Surprise: Planning Before Age 73

Required minimum distributions can push retirees into higher tax brackets at exactly the wrong time. The years before they begin are a valuable, and often overlooked, planning window.

For decades, a tax-deferred account feels like an unambiguous good. The balance grows, untaxed, year after year. But that deferred tax does not disappear. It waits, and eventually the IRS requires you to begin paying it.

Starting at age 73, retirees must take required minimum distributions, or RMDs, from their tax-deferred accounts. The percentage that must be withdrawn increases with age. For someone with a large balance, these forced withdrawals can be substantial, and they arrive whether or not the money is needed.

Why the timing is difficult

Large required withdrawals raise your taxable income. That can push you into a higher bracket, cause more of your Social Security to be taxed, and even increase your Medicare premiums. The result is that a lifetime of diligent saving can produce an unexpectedly heavy tax burden at precisely the moment you hoped to enjoy the money.

The window before 73

The years between retirement and age 73 are often the most valuable for tax planning. Income is frequently lower during this period, which can create room to move money out of tax-deferred accounts on your own terms, at rates you choose, rather than on the government's schedule later. Used well, this window can reduce the size of future required withdrawals and the taxes that come with them.

The key is to begin the conversation early. Once RMDs start, many of the most effective options are no longer available.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Passing On Wealth Without Passing On a Tax Bill

A thoughtful estate plan is about more than a will. It is about making sure the wealth you built reaches the people you care about, intact.

For many families, leaving something behind is one of the deepest financial motivations there is. Yet estate planning is often postponed, or reduced to a single document tucked in a drawer. A will is important, but it is only one part of a larger picture.

Coordination is everything

Wealth passes to the next generation through several channels at once: wills, trusts, and beneficiary designations on retirement and other accounts. When these are not coordinated, the results can conflict with your intentions, create unnecessary taxes, or send assets through a slow and public probate process.

A coordinated plan considers how each piece works together:

• How assets are titled, and whether they pass automatically or through probate
• Whether trusts can provide control, protection, and tax efficiency
• How beneficiary designations align with the overall plan
• The impact of taxes on what heirs actually receive

The goal: more to your family, less to taxes

Good estate planning is quiet work. Done well, it rarely draws attention, because everything simply passes the way it was meant to. The aim is straightforward: to help the wealth you spent a lifetime building reach the next generation smoothly, and with as little lost to taxes as the law allows.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Estate planning involves legal documents that should be prepared with a qualified attorney. Please consult qualified professionals about your situation.

Planning in a Higher-Rate World

With tax rates historically low and national debt high, the case for planning ahead has rarely been stronger.

It is difficult to know where tax rates will go. No one can predict that with certainty. But we can observe two facts. First, by historical standards, today's tax rates are relatively low. Second, the national debt and the obligations behind it are large and growing.

Put those together, and a reasonable person might conclude that the risk is tilted toward higher rates in the future, not lower ones. That does not require a prediction. It simply requires acknowledging which way the wind is more likely to blow.

Why it matters for your plan

If rates are more likely to rise, then paying taxes today, at known rates, can be more attractive than deferring them to an unknown future. This is the logic behind strategies that move money toward the tax-free bucket while current rates last. It reframes today's tax environment not as a burden, but as an opportunity that may not always be available.

Acting on what you can control

You cannot control tax policy. You can control how your own wealth is positioned in response to it. A forward-looking plan does not gamble on predictions. It builds flexibility, so that whatever direction rates take, you are prepared, and you keep more of what you have worked to build.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Using the Three Bucket Approach When Predicting Future Tax Rates

No one can predict future tax rates. But you can position your money so that whichever way rates move, you keep more of it.

Every investment you own falls into one of three tax categories. Taxable accounts are taxed every year. Tax-deferred accounts, like a 401(k) or traditional IRA, are taxed when you withdraw. Tax-free accounts, like a Roth, are not taxed again once they are funded.

The trap most people fall into is concentration. Decades of 401(k) contributions leave the majority of their wealth in the tax-deferred bucket, where every future withdrawal is taxed at a rate no one has set yet.

Planning without a crystal ball

You do not need to predict rates to plan for them. If you hold meaningful balances across all three buckets, you gain the flexibility to choose where your income comes from each year, and to manage your tax bill regardless of what Washington does. That flexibility, not a forecast, is the goal.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Top 7 Ways to Mitigate Capital Gains Taxes Upon Sale

Selling a business, property, or long-held investment can trigger a large capital gains bill. The tax code offers legitimate ways to soften it.

Capital gains taxes are owed on the growth of an appreciated asset when you sell. For a business owner or long-term investor, that bill can be substantial, but several well-established strategies can defer or reduce it.

• Hold for more than a year, so gains are taxed at lower long-term rates rather than as ordinary income.
• Use an installment sale to spread the gain, and the tax, across several years.
• Consider a 1031 exchange to defer gains on investment real estate by reinvesting in a like-kind property.
• Explore a charitable remainder trust, which can defer gains while generating income and a charitable deduction.
• Donate highly appreciated assets directly to charity, avoiding the gain entirely on what you give.
• Look at qualified opportunity zone investments, which can defer and potentially reduce gains.
• Coordinate the timing of the sale with your other income and any available losses.

Each of these carries its own rules and trade-offs, and the right combination depends on your situation. This is an area where planning well before a sale pays off.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Unique Tax Mitigation Strategies Your Father Didn't Tell You About

Beyond the 401(k), a few less-discussed tools can help money grow tax-deferred and be accessed tax-efficiently.

Most people know about the traditional 401(k) and IRA. Fewer are familiar with strategies that combine tax-deferred growth with tax-advantaged access later.

Roth conversions

Converting tax-deferred dollars to a Roth means paying tax now, at today's known rates, in exchange for tax-free growth and withdrawals later. Done in lower-income years, it can be a powerful long-term move.

Cash value life insurance

Certain permanent life insurance policies build cash value that grows tax-deferred and can be accessed in tax-advantaged ways during life, in addition to providing a death benefit. These are complex products with costs and trade-offs, and are offered by licensed insurance agents.

Health Savings Accounts

For those who are eligible, an HSA offers a rare triple advantage: deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

How Can Taxpayers Make the Most Out of Their Charitable Giving?

How you give can matter as much as how much you give. A few approaches let every dollar stretch further.

Writing a check is the simplest way to give, but often not the most tax-efficient. A few strategies help both the cause and the giver.

• Donate appreciated assets, such as stock held more than a year, rather than cash. You may deduct the full fair-market value and avoid the capital gains you would have owed on a sale.
• Use a donor-advised fund to bunch several years of giving into one year for a larger deduction, then grant to charities over time.
• If you are over age 70½, consider a qualified charitable distribution directly from an IRA, which can satisfy required distributions without adding to taxable income.

The best approach depends on your income, your assets, and your goals. Coordinating giving with the rest of your plan can meaningfully increase its impact.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Financial Freedom at Any Age

Financial freedom has less to do with a number on a birthday cake and more to do with dependable income you can count on.

When people picture financial freedom, they often imagine a specific age. In practice, freedom is really about income: having enough dependable cash flow to cover your life without anxiety, whenever you choose to step back.

That is why so much of retirement planning focuses not just on how much you have saved, but on how reliably that savings can be turned into income that lasts.

Building income you won't outlive

Some of that income can come from strategies designed to pay out for life, regardless of how markets behave. Where such guarantees exist, they are backed by the claims-paying ability of the issuing insurance company, and these products are offered by licensed insurance agents. Used thoughtfully alongside your other assets, they can add a floor of stability under your plan.

Wherever you are today, the path to freedom starts the same way: a clear picture of what you have, what you will need, and how to connect the two.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Controlling Your IRA Assets From the Grave

A historic transfer of wealth is underway. A little planning helps ensure what you leave behind actually lasts.

Retirement accounts are now among the largest assets many families pass on. But without planning, an inherited IRA can be depleted quickly, and its tax advantages lost.

Under current rules, most non-spouse heirs must empty an inherited IRA within ten years, which can create a significant tax bill if withdrawals are not planned. And once the money is in an heir's hands, how it is used is entirely up to them.

Adding structure

For families who want more control, naming a properly drafted trust as beneficiary can protect assets from an heir's creditors, a divorce, or spending decisions, and can stretch the benefit over time. These arrangements are technical and should be coordinated with an estate attorney.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Estate Taxes & Inheritance

Inheriting property raises practical questions: which taxes apply, and who is responsible for them?

Suppose you inherit a relative's real estate. What do you actually owe? The answer is often less alarming than people fear, but it depends on several moving parts.

At the federal level, the estate tax applies only to very large estates, above a high exemption, so most families never owe it. Inherited assets also generally receive a step-up in cost basis to their value at the date of death, which can sharply reduce capital gains tax if you later sell.

Where it gets more complicated

Some states levy their own estate or inheritance taxes with lower thresholds. And inherited retirement accounts carry income tax when the money is withdrawn. Because the rules vary by asset and by state, it is worth reviewing an inheritance with a tax professional or estate attorney before making decisions.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

I Finally Did It!

After years of advising clients on long-term care, Jeff Gurman and his wife made the decision themselves. Here is the thinking behind it.

Advisors are not immune to the same procrastination as everyone else. For years, Jeff Gurman helped clients plan for the cost of extended care while putting off the decision for his own family. Eventually, he and his wife acted.

The reason is simple math. Extended care, whether at home or in a facility, is expensive, and those costs can erode a lifetime of savings meant for a healthy spouse or the next generation.

Why an asset-based approach

Rather than a traditional long-term care policy, they chose an asset-based, or hybrid, approach that pairs care coverage with life insurance. If care is needed, the coverage is there; if it is not, a benefit still passes to their family. It is not the right answer for everyone, but for them it resolved the use-it-or-lose-it hesitation that stops many people from acting at all.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Get Cash for Your Life Insurance Policy

For some seniors, an unwanted or unaffordable life insurance policy has an option beyond simply letting it lapse.

Life circumstances change, and a policy that once made sense may no longer fit. Many people assume their only choices are to keep paying premiums or to surrender the policy for little or nothing. There is sometimes a third option.

In a life settlement, a policy owner sells an existing life insurance policy to a third party for more than its surrender value but less than its death benefit. For certain older insureds, it can turn a lapsing policy into meaningful cash.

Proceed carefully

Life settlements are complex and regulated, and they carry tax, privacy, and eligibility considerations, as well as costs. They are not right for everyone, and the value depends heavily on individual circumstances. Anyone considering one should review it carefully with qualified professionals before proceeding.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Do You Have Paycheck Insurance?

Your ability to earn an income is likely your single largest asset. Disability insurance is what protects it.

People insure their homes and their cars without a second thought. Yet the asset that pays for all of it, their ability to earn a living, often goes unprotected.

Consider the math. A person in their forties earning a good income may have several million dollars of future earnings ahead of them. An illness or injury that interrupts those earnings, even temporarily, can be financially devastating.

What disability coverage does

Disability insurance replaces a portion of your income if you cannot work due to illness or injury. Some coverage may be available through an employer, though it is often limited and may not follow you if you change jobs. Individual coverage can fill the gaps. Reviewing what you have, and what you would actually need, is a straightforward but important exercise.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

Should a Stay-at-Home Parent Have Life Insurance?

A stay-at-home parent may not earn a paycheck, but the economic value they provide is real, and expensive to replace.

When families think about life insurance, they usually focus on the primary earner. But the parent who stays home provides services, childcare, household management, transportation, and more, that would cost a great deal to replace.

If that parent were no longer there, the surviving spouse would likely need to pay for much of that work, often while continuing to earn a living. Those costs can strain a household at the worst possible time.

Coverage worth considering

Life insurance on a stay-at-home parent recognizes this hidden economic value and provides funds to cover the transition. It is frequently overlooked, and often more affordable than families expect. Insurance products are offered by licensed agents, and the right amount depends on your family's circumstances.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.

What's More Important? Netflix, Starbucks, or Your Kids?

Families consistently rank their children's security as a top priority, then skip affordable life insurance for the cost of a few small luxuries.

Ask parents what matters most, and the answer is almost always their family. Yet many go without life insurance that would protect that family, often believing it costs more than it does.

The comparison is uncomfortable but useful. The monthly cost of term life insurance for a healthy young parent can be less than what many households spend on streaming subscriptions and daily coffee. The difference is that one of those protects your children if the unthinkable happens.

A matter of priorities

This is not about guilt, it is about awareness. For most young families, term life insurance is one of the most affordable ways to make sure a loss does not also become a financial catastrophe. It is worth at least knowing the number before deciding it is out of reach.

This article is for educational purposes only and does not constitute investment, tax, or legal advice. Individual circumstances vary. Please consult a qualified professional about your situation.