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Personal Investing and Retirement Planning

You have built up your emergency fund and maxed out your 401(k).  Great job!  What's next?

Great question, because if you are saving at a level where you should, it will be necessary to look in to additional savings/investment strategies.  Remember, saving 20%  should be the minimum!

Keep in mind every physician's financial situation is unique and NO planner should be making any specific recommendations to you without knowing everything that's going on.

If you read the 'Benefits of Tax Code' section of our Education Center, you will know that it's important to think outside the box with your personal investments.  Far too often we see physicians only taking advantage of qualified retirement vehicles that have the pre-tax and tax-deferred benefits (401(k), 403b, 457, SEP & Simple IRAs). These vehicles are great because they lower your Adjusted Gross Income (AGI) for a given year. However, when it comes time to enjoy that money in retirement, remember it will be taxed at whatever the effective tax rate is at that time.  We can't predict what taxes are going to be in 10, 20 or 30 years, can we?

What if

  • the day after you retire, the market tanks like it did in 2001 and again in 2008? 
  • the tax rates increase to a level higher than they are today...hard to imagine, right?

Where would you go for your money in this situation?  If all you have is your 401(k), this could be devastating to your financial plan!  WHY?  If you take money out of an account with a low value at a time when taxes are high, it's the opposite of how you invested all of those years. You need more than one option, so that you don't make the same mistake that so many have. 

This is why we PASSIONATELY educate our clients to maintain financial balance while taking advantage of our tax code, from all angles!  You have to be ready for everything!

Reference this chart to better understand how these investment/retirement vehicles work:

*If you have a gain from the sale of your main home, you may qualify to exclude up to $250,000 of that gain from your income. You may qualify to exclude up to $500,000 of that gain if you file a joint return with your spouse. In general, to qualify for the exclusion, you must meet both the ownership test and the use test. See IRS guidelines for more detail.

The graph above reflects the IRS tax benefits outline effective 4/1/2015

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