Jay's Public Service Announcement

Jay Gershman |

Jay here with a public service announcement.

I get calls from clients all the time who need urgent access to money and get frustrated when I start to ask questions.

“How much do you need?”

“When do you need it?”

“Can you pay for what you need on a credit card to start”

“Can you send me last year’s tax return so I can plan for the taxes?”

Why do I need to know this information and why don’t I just hand over your hard earned cash?

This is why.

There have been times when my questions get an understandably frustrated response, which goes something along the lines of, “It’s my money and I shouldn’t have to beg you for it!”

What I often have to explain is that, unfortunately, your money is actually yours, Uncle Sam’s and that of the great state of Connecticut. Nearly every dollar we earn and save is tied up in tax complications, which have not been simplified after this latest structural overhaul. So, unless you withdraw from a bank account, every request for funds can and will be subject to capital gains or ordinary income tax.

I know this can be frustrating, but I always remind clients that while paying taxes is required, how much we pay is in our control. Our job at Retirement Visions is to try to minimize the effect of taxation by helping you make smarter decisions which can include tactics such as spreading the withdrawal over two tax years or making a large withdrawal to take a loan and pay the monthly payments from your retirement accounts.

This might be confusing, but it gets slightly worse for retirees collecting Social Security. Many of you are paying little or no tax on your Social Security benefits, but if you take just one more dollar than you should, you can expose up to 85% of your Social Security to ordinary income taxes. That’s not the kind of surprise you want to have come tax time.

With all that being said, know that your best interests are our top priority. These conversations can be difficult, but our number one goal is to get you the money you need to spend on what you want. By working together, we will achieve the result that you deserve instead of lining Uncle Sam’s pockets.