Retirement Tax Management: The Opportunity to Manage Tax Brackets wait wait let me get this straight you thought that when you retired your tax headaches would go away no no my friend okay they. May not be the migraines that you’ve may have experienced in the past but they’re still there let. Me introduce you to herma our MD the IRS and the Social Security Administration there are still tax issues in retirement, and that my friend is what we’re going to cover this entire month on the retirement Answer Man show welcome to the show my name is Roger Whitney and if you have not been with us before. This is the show dedicated to. Helping you not just survive retirement a to rock retirement and in retirement I do think tax management is one of the least understood least utilized levers that we have to really, make a difference in your journey into retirement, so we’re gonna explore that this entire month on the show so I’m excited that you’re here now before. We get into the show I’m gonna let you know we’re doing something special in November and it involves you this is our, annual listener survey and this is what we use to revamp the show and plan our, entire content calendar for 2020, Tax Brackets 2021 of what we’re gonna talk about on the show so I really need your help if you’re a member of six-shot Saturday you’re gonna get an, email asking you to take the. Quick survey so you can share your thoughts of what you would want to hear what you like what you don’t like or you can go to. Roger Whitney comm forward slash survey and take a very quick survey where.
You can share with us what you would like us to cover so we can help you with that let’s get on to our show with our all-important disclaimer it’s really important to, remember especially this month that I am NOT a CPA. Nor do I play one on TV I’m very tax aware in our financial planning. That I do with clients but this is helpful hints in education and make sure you talk to your CPA your financial adviser or your legal adviser before you make any changes with that let’s go, to our Hot Topic segment in a interaction I, had with a listener about the rising equity glidepath segment that we played last month so last month on the show. We shared an interview I had with Michael KITT C’s about the rising equity glidepath the research that’s out there that suggests that it might, make sense to be very conservative early in retirement and actually get more aggressive as you get older a, logic being that early in retirement the sequence of return risk is the greatest that risk of having bad markets right at the beginning when your longevity is, the longest and then as you get older and your longevity. Decreases you slowly get a little bit more aggressive very interesting research Michael and I have talked about it a few times privately and in public and a gentleman emailed me. Asked me what I thought of this approach and my response was I don’t know.
Anyone that’s actually implementing this type of approach and I recalled that Michael. Even talked about in implementation what it would require over time slowly getting more aggressive as you actually get older as very counterintuitive, and might be very difficult for firms to do as well as for clients psychologically to do and my impression of my conversation with Michael and when I talk. With him is that he wasn’t necessarily advocating that you do it, we were discussing the analysis and how much, it made sense or not now I’m not gonna speak for Michael kitsis in fact I’ll ping him and ask him privately but my impression in every time. I had was it definitely tended to lean that way and how you actually implemented that would be a whole nother issue that you’d have to deal with, do you actually implement it and slowly just ratchet up the allocation to become. More aggressive over time I don’t know well this gentleman thought that surprised him very greatly because, it sounded like he said that he was advocating it if we’re not advocating it why are we airing it on, the show he thought it was doing a disservice and I think we noted that we weren’t advocating and I don’t, know I have to go back and listen to it but I think it’s really important that we remember a few things when it comes to especially retirement research such as, the rising equity glidepath or withdraw rate studies these academic exercises are very valuable in identifying where bigger risks, might be and how things might go but.
We have to remember that their academic exercises and if you were to let’s say implement the. Rise in equity glide path in the way that the research suggested it doesn’t guarantee it’s gonna work out well and if you’re gonna implement a strategy like that that. Comes with you doing it consistently over decades to even try to match how the study came to, its results if you change your strategy two years five years ten years in then the study had nothing to do with what you’re doing because, you’ve totally changed things just like asset allocation and rebalancing it all looks great in papers but it’s the consistency of, executing a consistent strategy, the same strategy that will position you to reap the benefits of that strategy and I think that’s the big challenge with the rising equity glide path, it definitely feels great on the front end but when you’re 70, or 75 and you are slowly ratcheting up your investment allocation towards equities will it feel the same given that we. Are humans we are not rash we are behaviorally driven on a lot of these types of decisions especially with fear and greed not to mention well I guess. I am mentioning it bringing in the idea of, age and cognitive ability I don’t think anybody’s advocating this that I know of if there are great let me know and we’ll try to get around the show, and chat about it now I am doing a version of this.
