In 1989, I left Price Waterhouse and started my own CPA practice. Over the next dozen years I built a nice little business providing tax preparation and accounting services.
In 2002, I earned the Certified Financial Planner® designation, one of the most prestigious designations in the financial industry. Confident that I had the best training, the best processes and the best strategies in the industry, I was excited to begin helping my tax clients with their financial decisions.
But over the years, as I gained more and more experience with the products and strategies, I began to become disillusioned. It seemed everyone – Wall Street, the big banks, the advisors – everyone was making lots of money, except those who put their hard-earned money into the pot. Eventually I became so disillusioned I stopped offering financial advisory services to new clients, and even began calling existing clients to encourage them to move their money elsewhere.
You know what I’ve learned? The world has changed. It’s not your fault if traditional financial planning hasn’t been the experience you had hoped for. Forty years ago you could count on being in a lower tax bracket when you retired. Today, that advice and so much more of the accepted wisdom in the financial services industry can put people in harm’s way.
Now, as a member of The Breakaway League (a nationwide group of CPAs, attorneys, CFP®s and financial advisors breaking away from traditional approaches), I help clients understand the implications of the financial decisions they’re making. We help clients understand and implement the same income tax laws the wealthy have used for more than a century to build and protect sources of tax-exempt, spendable cash; often, what this means to our clients and ourselves (we eat from our own garden) is lowering our income taxes, lowering our risk, and increasing our spendable cash flow.
One small example: The U.S. government promised for decades that our Social Security benefits would be tax-exempt. In 1983, the government broke its promise. Congress declared that if you had other sources of reportable income besides Social Security, and your income exceeded a relatively low threshold, half your Social Security benefits would also be taxed. In 1993, the taxable portion of your Social Security benefits was raised from 50% to 85%.
How is it, then, that many of the wealthiest people in this country still pay little or no income taxes on their Social Security benefits? If you think the truly wealthy might have access to better tax advice than Mom and Dad do, you’re right. And for an average couple, that tax advice might put hundreds of thousands of spendable dollars back in their pockets over the course of their retirement.
I’m having fun again. Isn’t it time you felt good again about your financial decisions?
The Breakaway League is unaffiliated with HTK.