01 Apr

The Importance of Incorporating Taxes into Your Financial Plan

April 01, 2019

Does your financial planner advise you on the tax impact of your financial decisions as well as help you with tax saving strategies? If not, you should consider finding one who does.  Here’s why your tax advisor should be your financial advisor.

The reason why is simple: Almost all financial decisions have a tax impact.

If the impact of taxes isn’t taken into consideration while making financial decisions throughout the year, you could be paying more in taxes than you would otherwise. It is important that tax planning not be seen as separate from financial planning; instead, tax planning should be done simultaneously while making financial decisions and incorporated into your overall financial plan.

tax impact

What’s the tax impact of your decisions?

Incorporating tax planning into your financial plan improves the probability of meeting your goals, especially when planning for retirement. By having a financial advisor analyze your current and future tax liabilities and utilizing tax strategies to shift or minimize the amount of taxes you pay throughout your lifetime, you will be able to more effectively plan your current and future cash flow. Therefore, tax planning is a key component of creating a well-rounded, successful financial plan.

Don’t just take our word for it;  Alpha, Beta, and Now…Gamma, a whitepaper by Morningstar, quantifies the value of incorporating tax strategy into financial planning.

Tax laws are complicated, confusing, and ever-changing. Your financial advisor should stay on top of the ever-changing tax laws and ensure that you are not only making sound financial decisions, but also utilizing up-to-date tax-saving strategies.

Meet the Author: Adam Glassberg, CFP®, CIMA®

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

This is intended for informational purposes only and should not be construed as personalized investment, tax, or financial advice. Please consult your investment, tax, and financial professionals regarding your unique situation.

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