Now that Tax Day has come and gone, let’s discuss planning for 2023 taxes. In Comprehensive Personal Financial Planning (as routinely takes place at Van Wie Financial), there are constant trade-offs, such as between current income and retirement savings, taxes paid now vs. taxes paid in retirement, prestigious colleges vs. practical schooling, and the list goes on. Because the future is unknowable, we have to make decisions based on circumstances.
Statistically, younger people earn less money that do their parents and older co-workers. For a majority of these young workers, the Roth-style Retirement Account (tax paid now, but not in retirement) is most suitable, due to their low Marginal Tax Rate (the percentage paid on the next dollar earned). As incomes rise over time, many will shift into Traditional (deductible from current income) Retirement Accounts, on which taxes will be due in retirement.
Problematic among these young savers is gaining access to qualified professional advice. For those who decide to pursue a relationship with a financial professional, many seek help first from insurance salespeople masquerading as financial planners. Often, this proves to be a costly mistake.
Certain high-earning younger people, such as medical professionals, technology experts, and other highly educated career people, can justify a long-term professional planning relationship that assumes a strong probability of steady growth in assets. Those in less lucrative positions are not beyond receiving assistance, but should utilize differing helpful opportunities.
Younger people can learn about money, investing, insurance, taxes, and multiple other financial topics, by using today’s wealth (pun intended) of free resources. For our part, Van Wie Financial (VWF) contributes to the body of free knowledge in several ways. First is the Van Wie Financial Hour, broadcast live every Saturday morning at 10:00 on WBOB radio, 600AM and 101.1FM. Questions for our firm can be asked while we are live on-air, and may also be submitted through our website email address. Once completed, our radio shows are podcast and distributed wherever podcasts are made available, and are always free.
Additional free VWF Resources include those on our website, vanwiefinancial.com, where information is made available to the public on a variety of topics, and Blog posts are added weekly. Topics range from A to Z, financially speaking, and are each short enough for a brief, but educational, read.Next week we will discuss the dilemma posed by saving for retirement now vs. spending on the many priorities experienced by young taxpayers.
Van Wie Financial is fee-only. For a reason.
