A Different Degree of Wealth

Wealth on Purpose Chapter 6: Tame the Tax Beast

Retirement should be a period of financial security and stability, yet without a sound tax strategy, it can quickly become a time of uncertainty and unnecessary financial stress. Taxes, if not managed prudently, can significantly diminish investment returns and erode the nest egg that took a lifetime to build, which could jeopardize your quality of life when your long-awaited retirement finally arrives. With that in mind, understanding the tax implications of retirement income, investments, and distributions is paramount in preserving one’s wealth.

The Challenges of Tax Management

With taxes often being the most substantial expense one encounters, their impact on an individual’s financial portfolio cannot be overstated. This reality demands an active and thoughtful approach to tax management to prevent the erosion of wealth. Effective tax planning involves more than just understanding the tax code; it requires strategic action and foresight. Engaging with skilled Certified Public Accountants (CPAs) and experienced tax advisors can be extremely helpful, as these professionals are instrumental in maximizing deductions and reducing tax liabilities. However, caution is advised as some CPAs may not offer the strategic guidance necessary, instead focusing solely on the routine submission of tax forms. With that in mind, the choice of a tax advisor should be made with care, ensuring they offer comprehensive advice for a real financial advantage.

Strategic Use of Retirement Funds

One very important factor to consider is that managing retirement finances goes beyond yearly tax planning. When individuals consider using retirement accounts like IRAs for immediate needs, such as paying off mortgages, they must also weigh the complex tax consequences. These actions can affect Medicare premiums through adjustments like IRMAA and alter the taxation on Social Security benefits. A thorough strategy evaluates the benefits of immediate debt relief against potential future tax liabilities, ensuring decisions contribute positively to long-term financial stability.

Understanding Tax Implications

Retirees navigating the tax terrain must understand that each income stream – from Social Security to IRA distributions – carries unique tax implications. Proper management of these can lead to substantial savings, particularly when dealing with Income-Related Monthly Adjustments Amounts (IRMAA), which can alter Medicare Part B and D costs based on past income. Timely and strategic withdrawals from retirement accounts, adhering to Required Minimum Distributions (RMD) rules, and considering the tax benefits of Roth conversions are also critical. Additionally, incorporating tax-efficient investment vehicles like ETFs into your portfolio can provide tax savings. The key is a holistic approach, integrating investment decisions, tax bracket management, and future healthcare needs to maintain your financial health in retirement.

Optimizing Wealth Transfer through Gifting

Strategic gifting is a key component of effective retirement planning, enabling retirees to transfer wealth in a manner that optimizes tax benefits. Focusing on gifting appreciated investments rather than cash allows beneficiaries to potentially benefit from reduced capital gains tax obligations. This strategy not only aids in tax savings but also ensures meaningful support to loved ones. Critical to this approach is the integration of Qualified Charitable Distributions (QCDs) and Donor-Advised Funds (DAFs), which can significantly boost tax efficiency for the retiree. However, it’s imperative for retirees to assess how gifting impacts their taxable income and Required Minimum Distributions (RMDs), ensuring that their generosity doesn’t jeopardize their financial future. Strategic gifting, when aligned with an individual’s comprehensive financial plan, ensures tax efficiency while preserving the giver’s financial security.

Estate Planning and Inheritance Strategies

Advanced estate planning is crucial for retirees aiming to pass their legacy on to the next generation in the most tax-efficient way possible. By employing strategies like using trusts and leveraging the step-up in basis rules, retirees can safeguard their assets from excessive taxation. These methods not only facilitate a tax-advantaged transfer of wealth but also offer retirees peace of mind knowing their legacy will be preserved according to their wishes. Estate planning goes beyond simple asset distribution; it encompasses a thoughtful approach to minimizing tax liabilities for heirs, ensuring that the wealth accumulated over a lifetime benefits future generations as intended. For retirees focused on legacy preservation, incorporating these detailed estate planning strategies is essential for maintaining a balance between achieving philanthropic goals and securing personal financial health.

Leveraging Expertise

No retiree should navigate the complexities of tax law alone, so enlisting a CERTIFIED FINANCIAL PLANNER™ (CFP®) is extremely important. With their expertise, retirees can decipher complex tax codes and uncover opportunities for savings. They’re the strategists behind the effective use of IRMAA knowledge, Roth conversions, and investment selections that keep tax burdens minimal. A CFP® may ensure that retirees don’t overlook potential benefits, from tax-advantaged accounts to investment vehicles tailored for post-retirement needs. Their counsel is a crucial asset in transforming intricate tax laws into strategic advantages for a secure financial future.

Tame the Tax Beast

Taming the tax beast in retirement is about much more than saving a few pennies; it’s about smart planning and strategic decision-making that can save you and your family thousands of dollars each year. By strategically managing healthcare expenses through IRMAA, making informed decisions about investment types, and timing distributions and charitable contributions, retirees can significantly reduce their tax burden. By adopting the right strategies and seeking professional advice, retirees can confidently steer through their golden years, ensuring their hard-earned wealth is preserved and enjoyed, not eroded by tax. It’s smart planning that makes the difference between a good retirement and a great one.

If you have any questions or want to know how to get your hands on a copy of “Wealth on Purpose” by Bryan Ballentine, give us a call!

Have a great weekend!

Sources: “Wealth on Purpose” by Bryan Ballentine

Golf Tip of the Week

This Is Why You Make Dumb Decisions At The End Of A Round

When I played golf recently, I had one of my best rounds going in years. An important threshold was in play. It came down to the last hole, an uphill par 5. I hit a drive into the fairway, but to a somewhat awkward lie. In hindsight, the smart play was a manageable iron as a lay-up, but here is where I ignored common sense. Instead, I lashed at a 4-wood, which sailed left and out of bounds. I made double bogey.

I tell this story not for the therapeutic purpose of getting it off my chest (although I must say, that does feel better!), but because it illustrates the type of poor decision-making we tend to succumb to late in rounds. And that, we’re starting to learn, comes with a good reason.

A study by the French Institute of Health and Research sought to explore how cognitive thinking is impacted when our brain has been sufficiently taxed. Put simply, it wanted to explain why we do stupid things when we’re tired. The method used was by studying the impulse control of two sets of volunteers — those put through a series of difficult memory tasks over the course of six hours, and those who took it relatively easy over the same period. Ultimately, researchers found the less-taxed group exhibited greater control at day’s end.

What the study underscored is that an overworked brain is no different than your leg muscles in the final miles of a marathon. The simplest task becomes arduous. According to a summary of the French study in Psychology Today, “Hard memory work requires a glut of energy and leaves less available for making good decisions. And when that happens, the cerebral gears start slipping and impulsiveness kicks in.”

While this may in part explain the type of brain cramp a mid-handicapper like me is prone to at inopportune moments, the better case study is a world-class golfer at the end of a particularly stressful week. Consider two of the more prominent major-championship collapses in recent memory—Phil Mickelson double bogeying the 18th hole at Winged Foot to lose the 2006 U.S. Open and Jordan Spieth putting two shots in the water on the par-3 12th hole at Augusta National to surrender a commanding lead in the 2016 Masters.

It’s not a coincidence that Mickelson and Spieth are two of the more cerebral players in golf, and that both were faced with a complex set of challenges: Mickelson had meticulously analyzed every hole at diabolical Winged Foot in search of his first U.S. Open; Spieth was trying to extend a streak of seven consecutive rounds with the lead at Augusta while also clearly fighting his swing.

By Sunday afternoon, both players had expended an inordinate amount of mental energy, and both ended up showing incredibly poor judgment at a crucial moment. Mickelson, after missing the fairway badly on the 18th hole, compounded his mistake by trying to cut a shot onto the green from an improbable angle (he hit more trees). Spieth, meanwhile, saw his three-shot lead in the Masters disappear by taking an aggressive line toward the front right pin at the 12th. Both players required a degree of impulse control—Mickelson should have punched back into the fairway, Spieth should have aimed at the middle of the green. Perhaps owing to mental fatigue, both failed.

According to the science writer David DiSalvo, a pre-emptive measure to defend against this sort of brain drain is to “guard your mental energy and defer important decisions for when you have more on tap.” That might sound easier said than done. Like it or not, some rounds find you grinding right from the start. But it does speak to the merits of not overcomplicating every decision on the course.

Like golf balls in your bag, you only have so many brain cells to work with. Best not to waste them.

Tip adapted from golfdigest.comi

Recipe of the Week

Gullah Style Shrimp And Grits

4 Servings


  • 4 strips bacon
  • 1 medium onion, chopped
  • 1 pound medium uncooked wild shrimp, peeled and deveined
  • Sea salt and freshly ground black pepper
  • 1/2 cup all-purpose flour, plus more as needed
  • 1 tablespoon garlic powder, plus more if needed
  • 1/4 cup canola or vegetable oil, plus more if needed
  • 1 cup hot water
  • 2 cups quick-cooking grits, prepared according to package instructions
  • 1/2 cup green onions sliced on a bias


  • Heat a heavy-bottomed skillet (preferably cast-iron) over medium-high heat. Add the bacon and cook until crispy. Remove and set aside, reserving the drippings. Add the onions to the skillet and cook on medium-low, stirring, until slightly tender and the skillet has browned bits, about 3 minutes.
  • Meanwhile, sprinkle the uncooked shrimp with a few pinches of salt and pepper in a large bowl, then sprinkle with 1/4 cup flour and the garlic powder and toss. Set aside.
  • Turn the skillet up to medium-high heat and add the canola oil. Test the oil temperature by dropping in a dab of flour. When it sizzles, add the remaining 1/4 cup flour. Brown the flour and onions, adding more oil if too dry, until slightly dark brown. Add the shrimp and bacon, breaking the bacon into small pieces, and stir with a wooden spoon. Slowly whisk in the hot water and bring to a slight boil, then stir and reduce the heat to a simmer until the gravy thickens and browns, 5 to 10 minutes. Taste the gravy and add more salt, pepper or garlic powder if needed.
  • Serve the shrimp over the prepared grits topped with green onions.



Recipe adapted from Foodnetwork.comii

Travel Tip of the Week

This 11-Night Cruise Is The Only One In The World To Dock In Washington, D.C. — How To Get On Board

If you’re looking to experience a little American history on your next vacation, look no further than American Cruise Lines’ new American Revolution cruise. In 2018, the company became the first to dock in Washington, D.C., in more than 60 years — and this year, it is upping its game. Now, it’ll operate its 11-night itinerary round trip from Washington, D.C., instead of Baltimore.

Before embarking on the ship, guests sailing an American Revolutionary journey can stay at the Four Seasons Washington, D.C., for an overnight pre-trip. Then they’ll board one of American Cruise Lines’ new small ships American Constitution or American Glory for the voyage. The cruise will feature several of the company’s newest Coastal Cats catamarans sailing the itinerary in 2024-2025, each of which can sleep up to 100 passengers in 56 spacious cabins. (The cabins start at 300 square feet.)

After departing Washington, D.C., guests will make three stops in Maryland, including one at Annapolis, where they can tour the U.S. Naval Academy on an excursion. Then it’ll have a day at sea, followed by an overnight in Norfolk. (For excursions, guests can book a day trip to visit the Wright Brothers National Memorial in North Carolina’s Outer Banks or tour the MacArthur Memorial and Chrysler Museum of Art, among other options.)

Next up are visits to Virginia’s “Historic Triangle,” including Williamsburg, Yorktown, and Jamestown. Finally, the ship will head for Mount Vernon, where guests can tour George Washington’s famous home, before returning to Washington, D.C.

“American’s small U.S. ships offer guests opportunities to visit ports of call inaccessible by larger ships, plus itineraries that are the only cruises of their kind on the market; sailing fully in the U.S.A. throughout,” Melissa Young, Director of Business Development at American Cruise Lines, said in a statement provided to Travel + Leisure. “The American Revolution cruises are a testament to what is only possible with American’s extraordinary fleet. And this itinerary also features a fabulous new option for the drive-to market, allowing many guests to skip flights and jump on board hassle-free.”

Rates for the American Revolution Cruise start at $6,160; book your trip at

Tip adapted from travelandleisure.comiii 

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