Navigating Tax Hikes for Retirees: A Complimentary Guide on Managing Financial Implications
Tax Changes Ahead: What Retirees Need to Know
In the realm of taxes, retirees should be mindful of potential changes that may impact their financial plans. The looming risk of tax increases necessitates careful consideration.
"It carries a significant risk—it's out there," explained Kristian Finfrock, Founder and Financial Advisor at Retirement Income Strategies. "When devising a retirement plan, it's crucial to consider future tax implications."
Currently, the tax landscape is dynamic. With Donald Trump returning as President and the enactment of the tax cuts and jobs act, the future of these tax reforms remains undecided. Even if extended, taxes are expected to revert to their 2017 levels after four years, potentially resulting in an increase for most individuals.
"In the context of retirement planning, a strategic approach is necessary," Finfrock stressed. "This includes accounting for the dual aspect of taxes—current and future."
Individuals three to five years from retirement may be particularly interested in reducing, lowering, or potentially eliminating future taxes. For assistance, Retirement Income Strategies has created a resource called the Madison Money Map, which includes tools to help plan for tax efficiency.
To avail of this free resource, call or text "MAP" to 608-313-7556.
In addition to these general insights, expatriates in the UK and the US should be conscious of tax changes specific to their countries. For instance, starting April 2025, the UK is set to move from a domicile-based to a residency-based inheritance tax system. This shift could result in more non-UK assets being within scope for taxation. Similarly, in the US, there is a proposed increase in the estate and gift tax exemption, which could lead to larger tax-free estates.
While incorporating these details may benefit retirees, it is crucial to consult with a tax advisor for up-to-date, official guidance and tailored advice. By staying informed and proactive, retirees can better manage their tax exposure both now and in the future.
"In the process of devising a retirement plan, it's essential to account not only for current tax implications but also for future ones, as taxes may increase due to various factors such as potential tax reforms."
"For expatriates, it's crucial to be aware of tax changes specific to their countries, like the shift in the UK's inheritance tax system and the proposed increase in the US's estate and gift tax exemption, which may have a significant impact on personal-finance matters."
