by John Dombroski, Jr., President of Grand Canyon Planning Associates, LLC
When it comes to saving for retirement, getting an early start on setting up a financial plan is the best thing you can do for yourself. It’s important to develop good habits early on in order to maximize savings and take advantage of compounding. In addition to this, setting up a proper tax strategy now may increase your retirement income and reduce your taxes later on.
If you still have at least 10 years before you plan on retiring, time is on your side. Consider looking at both pre-tax and after-tax investments as potential strategies.
Traditional IRAs and 401(k)s are classic examples of pre-tax investments. You can put off paying taxes on contributions you make to these accounts as well as the growth these accounts generate. Typically, when you withdraw funds from these accounts for retirement, that’s when the taxable event occurs.
A Roth IRA is an example of an after-tax investment. When you put money into a Roth IRA, the contribution is pre-taxed. However, your withdrawal is non-taxable, including the growth generated (so long as you have had your Roth IRA at least five years and you are at least 59½ years old).
If you are striving for greater tax efficiency in retirement, give Grand Canyon Planning Associates a call at 866-991-4272. Our complimentary review of your current financial plan could help you find and develop strategies to minimize your tax liability.
Securities and Advisory Services offered through Client One Securities, LLC, Member FINRA/SIPC and an investment advisor. Grand Canyon Planning Associates, LLC and Client One Securities, LLC are not affiliated.
