Advanced Wellbeing offers financial therapy insights each week to inform more details about financial therapy.
A client called me last week wanting to know how to claim a $7,500 tax refund he thought he’d missed.
His question was based on an email sent in early July to Social Security recipients from Frank J. Bisignano, commissioner of the Social Security Administration. It read in part: “. . . over 35 million American seniors received an average of $7,500 in relief this tax season.”
As you advance in your career and begin to build financial security and invest for the future, you will build a financial team. Most likely, you’ll find a CPA to do your taxes, a financial advisor for investments, and an attorney for legal matters such as estate documents. Ideally, each professional will be capable and will act in your best interest. It’s natural to assume that their work will come together coherently. Yet it often doesn’t.
How do you find a competent, ethical financial advisor? An approach I have recommended for years is to interview planners, ask questions, and persist until you get clear answers. Under a relatively new SEC rule, getting those answers is becoming harder to do.
If you’re wading through the process of preparing your tax return, you may well be asking, “Why does this have to be so complicated?” Even financially savvy people find themselves second-guessing what qualifies, what doesn’t, and what changed this year..
The recently passed “One Big Beautiful Bill” was promoted as the largest middle-class tax cut in history. The price tag: $5 trillion. The pitch: permanent, revolutionary relief for working families. The reality: a master class in tax theater. With the extension of the 2017 tax law, the real headline should be “taxes remain unchanged, preventing a broad tax hike.”
Brokers might recommend margin loans as tax-savvy strategies that allow clients to access “tax-free” cash while keeping their portfolios intact. In many cases, however, the math benefits the advisor more than the investor. The cost of borrowing often exceeds what an investor is likely to earn by holding on.
Imagine picking up a few items at the grocery store, checking out, and noticing a line on your receipt that says, “Tariff Tax: $7.25.” That would get your attention and spark some questions. Why am I paying this? Who decided this was necessary? Where is the money going?
Now imagine never seeing that line, but still paying the added $7.25. That’s the reality of tariffs.
When I started my financial advisory business over 40 years ago, the technical side of investing felt like rocket science. Now, thanks to technology and the rise of passive investing, putting together a sophisticated, diversified portfolio has never been easier. The role of a financial planner today is less about spending hours crafting portfolios and more about serving clients with holistic financial planning and understanding financial psychology.
Even for those who were devastated by the recent election results, there are some positive aspects to consider when it comes to taxes. The unanticipated sweep of the presidency and both houses of Congress by the GOP is likely to change the direction of some federal tax policies.
If you are nearing retirement and have been putting money into a 401(k) or IRA, you are on the right track. Fully preparing for retirement, though, also requires developing a comprehensive financial plan that integrates tax strategies, healthcare costs, and contingency plans for potential shortfalls. Just thinking about this planning can feel overwhelming, which is probably why so many people feel uncertain about retirement and yet put off addressing it.
