- > Tax-deferred account
- > Balance Portfolio
David and Joanne, 70 and 66 respectively, had owned a small manufacturing business, which they sold when they were trying to make the transition to retirement. They came to TABR for help managing assets of just over $1 million that they had accumulated over the years, mostly through savings. Their goal was to make their money last for another 20-30 years of retirement, a goal that would require careful management and growth.
However, we discovered that when they sold the business, they were to receive an income of nearly $500,000. We immediately saw that this final lump sum would put them in a much higher tax bracket for the year, which would end up costing them a substantial portion of their money. In fact, more than 40% would go to taxes. As a result, we recommended stretching the income over two tax years along with the tax benefits of a SEP IRA, which allows a contribution of up to 25% of one’s income each year into a tax deferred account.
We were able to save them tens of thousands of dollars right away on that single financial event, and we subsequently put in place a balanced portfolio to help them meet their long-term financial goals.
Disclaimer: These stories are for illustrative purposes only and are not real client stories.