Most people do not plan for their taxes throughout the year. They file their taxes and then shunt the whole process aside until next year. In reality, any-
one who earns money and files taxes can save money by planning throughout their life.
In Your 20s
The good news is you’re probably not taxed very heavily yet, but the bad news is this is because you are not making very much money. Make sure that you have all your key financial documents organized and identity information like your birth certificate and Social Security card in a secure place. If your parents opened any accounts for you when you were younger, make sure you have all relevant paperwork now. Consider meeting with an accountant or advisor to make sure you set off on the right foot. Tips:
Contribute to a tax-deferred retirement account, like a 401(k) plan or IRA. Take full advantage of any employer-matching contributions, even if you want to pay off student loans quickly. That free money will most likely grow in your account at a higher rate of return than your low-interest loans.
Keep track of your student loan payments. You can deduct the interest you pay on your loans when you file taxes and sometimes can qualify for an income based repayment plan if you owe more than you make.
Make sure you are withholding the correct amount. Getting a big refund at tax time is exciting, but by over-withholding, you have let the government sit on your cash without making it work for you during the year.
In Your 30s
Now your finances get significantly more complicated, as your savings increase along with your expenses. Tips:
If you plan to get married or have children, meet with a tax or financial advisor to ensure you are making the best financial decisions for this point in your life. Consider setting up a 529 plan for your children’s future education.
In Your 40s
This is when you will probably hit your earning peak. This may bump you into a higher tax bracket, so maximizing possible deductions
(like contributions to a retirement account) is more important than ever. Tips:
Make sure to meet with an advisor before drawing money from taxable investment accounts for large expenses (such as your child’s college tuition), as there may be complicated tax ramifications. Also stay abreast of any tax credits for education: your child’s or your own.
In Your 50s
Retirement is edging closer and now you should be focused on saving as much as possible. Tips:
In Your 60s
This tax-planning decade is crucial to your retirement years. Tips:
What’s MOST important to you NOW? Covid? The Economy? Or something else?
The first American death from the COVID-19 pandemic occurred on 2/06/20. As of 9am ET on 8/06/21, i.e., 18 months later, 619,158 Americans had died from the pandemic, an average of 7,938 deaths per week. 3,273 Americans died of COVID-19 in the last week (source: NBC News, Meet the Press: First Read).
“The problem in the last few cycles as I see it is we get promoters and insiders and people who have done very well cashing out as retail is buying,” says Jim Chanos. “The game would appear to be rigged against you if you keep coming in and buying things 10x what they are worth.” Squawk Box, Aug. 10, ’21
Good point Mr. Chanos, yet how to protect people from making foolish investments or refusing to get vaccinated? Isn’t this what happened after the Internet Boom of the 90’s led to the TECH WRECK; or the Mortgage Boom led to the DEBT WRECK of ’08? And looks a lot like something that’s going on now with the ‘Gamification’ of the stock market?
“Experience is the name everyone gives to their mistakes.” -Oscar Wilde