To Roth or Not

Over a lifetime of investing, taxes and behavioral mistakes are likely to be the two biggest drains on portfolios.

Behavioral mistakes can be reduced, if not completely eliminated, by establishing a prudent financial plan, with a portfolio that captures the long-term returns of each asset class and staying committed to it.   

Taxes can be reduced, if not completely eliminated, by implementing smart tax-planning strategies in your financial plan, as nationally acclaimed author Wade Phau reveals in his recent book, "Retirement Planning Guidebook – Navigating the Important Decisions for Retirement Success." Dr. Phau emphasizes that the strategic tax management of your portfolio can push out portfolio sustainability by over 5 years.   

If you are still working, one strategy to consider is investing in a Roth 401(k), if your company’s plan allows it.  

But should you pay the taxes now, and invest in a Roth 401(k), or opt for the traditional 401(k), and pay the taxes later, and if so, how much should you invest?

If you are struggling with this choice, take a moment and read this timely Wall Street Journal article, titled Roth vs. Traditional 401(k): Where to Put Your Money for Retirement? (Subscription might be required). The author Anne Tergesen points out "The decisions can leave even savvy investors a little overwhelmed."

Is Tax Planning in Your Financial Plan?

Decisions to leverage a Roth 401(k) and other tax-minimizing opportunities should be part of your prudent financial plan today and is likely to have a significant impact on the sustainability of your portfolio later in life. If you have $1 million or more of investible assets and are in or close to retirement, let's connect and start strategizing a way to to minimize your taxes and maximize your returns.