The Biggest Tax Mistakes in Retirement Planning


Tim Speiss, EisnerAmper Personal Wealth Tax Partner, was recently interviewed on Yahoo Finance as part of its retirement segment to share some of the biggest tax mistakes people make in retirement.

What are the biggest tax mistakes and misconceptions people have in retirement?

The number one mistake people make is not funding their retirement enough. Second, participants are not taking advantage of all the investment education tools available to them to diversify their assets. Finally, it is important for older and younger professionals to remember to transfer plan balances if they change jobs, as we currently work in a very mobile environment when it comes to changing jobs.

As you mentioned, half of older American adults are now retired according to the Pew Research Center. If someone retired last year, they may have received COVID benefits. What should be on their tax checklists?

If a person has retired or changed jobs, it is important that they continue to fund their pension plan. They also need to consider their new access to health care, especially if they no longer have access to a traditional company plan. Lifestyle is another category to add to the checklist. With COVID, people across the United States have moved to new states and need to be aware of the tax rules and laws in those states.

Since COVID hit, inflation has been getting worse. Should someone delay their retirement or is there a way to limit some of the impacts on their retirement assets?

Today’s new work environment has given people the ability to be mobile like never before. The pandemic has allowed us to reinvent what Americans considered the traditional work style, and that should continue.

How should someone pitch your retirement plan in, say, their 30s and 40s compared to if they’re about to retire, say, in their 60s?

When you’re building a retirement plan in your 30s or 40s, start accumulating assets and contributing to a deferred plan. Depending on your type of job, this may be a 401(k) plan or a Koegh plan. For younger people, it is imperative to save as much as possible, get the tax advantage and start an investment plan. Learn about asset allocation and asset accumulation models. Your asset allocation model should focus more on equities than fixed income securities. However, if you are facing your retirement plan in your 60s, your asset allocation model should now focus more on fixed income securities than equities.

Watch the full interview here.

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