Here are five questions we wish more CPAs would ask their retired clients. Is your CPA asking you these questions?
#1 If you were to have a $50k emergency expense come up, where would you get that money?
Cash? Do you have an emergency fund? Do you pull it from an IRA and get slapped with tax? Roth money available?
Sadly, most people don’t think about this until it is too late, and having an emergency fund matters a great deal to retirees on a fixed income.
#2 Do you have any idea how your retirement income is going to be/is being taxed?
Retirement accounts allow assets to grow tax deferred, while non-retirement accounts do not. They are taxed each year on the interest, dividends and realized gains via tax from 1099 and, therefore, need to be managed in a very tax-sensitive way on both the equity and fixed income side.
For more insights, see our blog on Utah retirement tax.
#3 Are you taking Social Security yet?
If you are retired (and hence in a lower tax bracket) but not yet taking Social Security, or have some room in your current tax rate bracket, it may be a good idea to perform a Roth Conversion. Many retirees don’t realize this and when they start taking Social Security, their income gets bumped up to a level where taxes are higher and it doesn’t make sense to consider a Roth Conversion.
#4 Do you give to charity?
If you are taking the standard deduction and giving to charity, you should consider a QCD at 70.5 or bunching the charitable deductions into one year to offset a big tax year.
#5 How financially literate are your kids/grandkids?
Asking this question will help your family’s younger generations to uphold healthy financial habits (saving, investing, avoiding scams, etc.).
If your CPA is not asking you these questions, maybe it is time for a financial review so you can get some of these issues addressed.
We are financial advisors serving Utah and beyond. Contact us to set up a time to speak.
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The opinions expressed herein are those of the firm and are subject to change without notice. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of author, may differ from the views or opinions expressed by other areas of the firm, and are only for general informational purposes as of the date indicated.
