Yet, we have the responsibility and obligation to provide a secure retirement for ourselves and our spouses. The companies our parents worked for had an obligation to fund their pension plan to take care of all company employees through their retirement years. Unions were created for the same reason and pensions were their #1 concern. Social Security was the ”back-up plan” as a supplement, NOT as the primary source of revenue. When the FDR administration introduced the Social Security system, life expectancy was approximately 67 years old; where people were expected to collect for a few years and die. Last year the life insurance industry created annuity and actuarial tables to age 120 and expect millions alive today to live well beyond age 100. Of course the tables do not reflect the quality of life, health or financial status of these people, just that they will be here to ages once thought to be only Biblical in scope.

Today, American businesses have virtually eliminated the Defined Benefit Plan – a traditional pension plan, and replaced it with a Defined Contribution Plan – the 401k or the 403b. In essence, the companies have skirted a direct obligation to their employees and replaced it with a direct participation program, with no obligation to match funds, whatsoever. Now, the employee will ”get out” of the plan in direct proportion to what he/she ”puts in” to their plan. Problem is; no one has been taught what the required contributions are to ”guarantee” a comfortable retirement income and lifestyle, factoring in the effects of inflation and a lifespan possibly exceeding age 100. Without proper planning, most Americans will outlive their retirement portfolios, creating a generation of poverty-stricken extremely senior, Senior Citizens.

The government is ”charging” us with the responsibility to fund our own retirement with what’s left over after paying our income taxes (both state and federal), the high cost of living and the expenses of raising and educating our kids. The Government demands of us fiscal responsibility while they have none! They just print more money or increase revenue by increasing taxes or by eliminating deductions, a back-door tax increase. Don’t fool yourself by depending on Social Security either! There is no guarantee that you will receive it, as they just might make the eligible retirement age 80 to receive a full check; based on the mortality tables mentioned earlier, or eliminate it all together if your income or assets are above a certain percentage. They might even cut the benefits in half or scale it back based on need, need I say, as determined by them.

It is obvious, to this Retirement and Estate Planning Specialist, that the only sure way to ”make it” financially is… to fund it yourself, in savings and investment vehicles that are guaranteed* to be worth more tomorrow than yesterday and are guaranteed* to provide an income for life in a tax-advantaged environment. In addition, plans need to be implemented that will allow you to protect your portfolio from what I call the five forces of portfolio demise: Liability, Expense of Health Care, Expense of Long-Term-Care, Taxes at Death and Market Losses.

There is a solution to this inevitable situation and that is to acquire a pension plan, one that is guaranteed* to provide an income stream for the rest of the pensioner’s life! Since companies are basically sending those types of plans the way of the dinosaur, where can a person create and fund a plan that will provide a monthly check for the rest of their life and even their spouse’s lifetime too, just like the pensions of the ”old days”? And, since we might live to age 100 and beyond, the perfect pension-like plan would also have the opportunity to provide an increasing income to keep pace with inflation while also providing a way to cancel the income stream in lieu of a lump-sum withdrawal at anytime we choose. I am thrilled and proud to report that there are savings and investment vehicles available, through age 90, that when combined, may accomplish all of these retirement and estate planning goals.

Interested in learning how? Great! All you need to do is: 1st Keep reading my column and tell others to do the same. 2nd Attend my workshops when you see them advertised in local papers. 3rd Visit our website frequently for current information. 4th If not fast enough for you, call my office for a non-obligatory, absolutely no-cost consultation to discuss your particular needs and questions, where I will share with you the techniques and strategies I believe will best accomplish your financial goals and objectives – it’s that simple.

In closing, I’d like to thank you for taking the time to read my column and I hope you will avail yourself of the opportunity to meet with me, one on one; to join our American Prosperity Group family of clients and enjoy the Peace of Mind that comes with Professional Retirement, Estate and Long-Term-Care Planning!

Should I take wages or dividends from my privately owned
corporation? What is the best way of taking money out
of my company? In other words, what will result in the
least amount of income taxes?

A Canadian accountant will perform a dividend-salary mix
calculation to determine the best way of withdrawing money
from the corporation.

Even though Canadian income tax laws are different from
other jurisdictions, some of the same principles of tax
planning will still apply.

In order to qualify for Canada Pension Plan (C.P.P.)
benefits or to make Registered Retirement Savings Plan
(R.R.S.P.) contributions, there must be some earned income.
This requires the payment of wages. In fact, many
accountants will make sure that their clients have maximized
their C.P.P. and R.R.S.P. contributions for the year in
order to ensure sufficient future retirement benefits, even
if it costs a little more in income tax and/or payroll taxes.

On the other hand, the Dividend Tax Credit reduces the tax
payable on dividends received from the corporation, since
the corporation has already been taxed on its income.
Therefore, the accountant may recommend that the corporation
pay some dividends.

Sometimes, if the owner doesn’t require the cash, the income
is simply retained inside the corporation and tax is paid at
the lower small business rate by the corporation. If the
corporation had income in excess of the Small Business
Deduction, it likely would pay it out in wages.

Depending on the circumstances of the taxpayer, wages may be
the least expensive way of taking money out of the corporation.
Sometimes, dividends are better. Generally, a mix of both is
required.

An accountant will have to balance many factors to come out
with the optimal mix for you. He will consider your family
situation, other income sources, losses, investment and
retirement objectives, et cetera. Keep in mind that the lowest
possible tax bill for the current year is not always in your
best interests.

The Tax Planning In Buying And Selling A Corporation can eliminate most of your taxes, or raise your income taxes if the planning is not properly done in your business. Smart tax planning is essential when starting or selling a business, or corporation. There are some major key tips in the tax planning in buying and selling a corporation. Also, it’s very important to look at all aspects of tax planning when starting any business in the world. When people start their tax planning for buying and selling a corporation all sorts of things to consider pop up in their heads like capital gains, write offs, stock purchases, portfolio performance, and risk. So, let’s talk for a moment about what is going on in the heads of people that are planning to buy and sell a corporation or any business of the matter in today’s world.

Capital gains become a major thing to look at when purchasing or selling a corporation because you are ether going to have a increase on your return of investment or you are not when the business is sold. Which leads to another point in this called write offs. When people buy corporations the first thing they want to know is how much they will be able to write off as a corporation, or as a business owner of that company. Stock purchases is a great advantage to look at when tax planning before the purchase of a corporation because the better high dollar amount you get on a share the more everyone in your family is better off when the business is running in today’s economy. Many people are thinking about the portfolio performance, and risk of the corporation when tax planning. A corporation portfolio performance will always determine how your tax planning will be according to how well the company is doing and its shares in stock it’s accumulating in the near future. A tax tip to consider also in buying or selling a corporation is that they are often taxed at a lower rate and have better taxable benefits than any other business out in the world today. Now, some of you may be thinking about this question in your mind.

What Impact Can A Home-Based Business Have On Your Taxes? That’s an excellent question you asked me because theirs a few tips to consider when looking to start a home based business when tax planning in today’s world. Most people do not realize just how much money they can save by starting a home-based business. Obviously, the goal is for you to make money with your home-based business, but even if it does not turn a profit right away, you can still benefit from the mere fact that your business exists and that you are attempting to turn a profit in the business. Also, your home-based business does not have to be a full-time venture. It is something that can fit into your current daily life. You can continue to do what you are doing today, and add a home based business into your focus. Eventually, your goal can be to replace (and greatly exceed!) the income that you generate from your “job.”

The fact is that most people still struggle with finances, but there are things that you can do legally to ease that burden. If you operate your own home based business, then there are many deductions you will be able to take every year that will dramatically lower the amount you have to pay to the IRS in taxes such as home office expenses, travel expenses, entertainment expenses, depreciation expenses, professional services expenses, advertising expenses, and taking a loss. So, if that is not enough reason alone for people to start a business of their own then nothing will in your lives on this planet.

Financial asset management, or wealth management as it is sometimes called, is the management of your financial assets. Many people know how to make money, but they are clueless when it comes to managing the money that they make in order to secure their financial future, or to reach financial goals that they have set. Management of your finances and your assets is not something that is limited to big corporations or even to businesses; in fact, many individuals can benefit from the advice of a financial manager.

What Do Financial Asset Managers Do?

A financial asset manager is a person that works with individuals or companies to meet the goals that they have set by properly managing the financial resources that they. Goals may include buying a first home or another home, saving for their children’s education, planning for retirement, or accumulation of wealth.

The Planning Process

Financial managers will work with their clients through a planning process that will allow the goals that they have set for their financial future to come to fruition. This may include analysis of the person or business’ income, taxes, expenses, current retirement plans, insurance coverage, trusts, wills, and more. This gives the financial asset manager an idea of the person or business’ overall financial situation so that strategies and objectives can be identified and then developed to achieve the goals that you have. The financial asset management process can include the following services: cash flow analysis, planning for taxes, retirement and education, estate recommendations, investments and review of your insurance to make sure that you and your family are covered completely with the types of policies that you need to protect your assets in the event of sickness or death.

Investments

A big part of financial asset management usually involves investments. A financial manager can help to identify the investments that can make your wealth grow, including stocks, bonds, index funds, mutual funds, and other securities that are publicly traded. Many people are a bit gun-shy in today’s economic environment when it comes to investing, so a good financial manager can help you find well-researched investment strategies to manage your wealth in a way that can secure the future that you have always envisioned and make the most use of the money that you have right now. Choose your financial manager wisely, and make sure that they are fully trained (usually with an MBA certification) so that you can feel more secure in giving them access to your funds.

There are many different strategies that you should be aware of when creating your plan for wealth. Among those options should be a strategy that helps you minimize taxes on your income. Everyone has different income scenarios and no two tax strategies are exactly alike. Customizing the right tax plan begins with answering questions like: “What current tax laws exist?”, “Which ones affect me?”, and “How can I customize a plan to reduce the taxes that I may owe?”

Both individuals and businesses can benefit from a tax reduction strategy. Individuals benefit because they are able to reduce taxes on wages and other forms of taxable income. From a business perspective, the more after-tax income savings, the greater the profits a company will have to reinvest into operations. There will also be more profits available to distribute to owners and shareholders.

A tax plan is needed the moment there is income subject to tax. For many years, tax advisors have customized strategies to help wealthy taxpayers reduce their tax liability. However, there is a greater need for taxpayer literacy to show low-to-moderate income individuals how to benefit from tax saving options and how to apply these moves throughout the year for greater savings.

As with any plan there are certain results that it is designed to achieve. The major goals of a tax plan are to reduce taxes and keep more of the money that you earn as an employee, self-employed person, or investor. By having a road map to guide you, you can learn how to stop loaning money to tax authorities interest free. Consider the money you pay out in income taxes that is returned to you as a refund. Then take into account how much more effective it would be to have that same money available to you throughout the year. By using strategies to reduce taxes on income you can free up cash flow and have more money available for savings, investing, paying down debt, and to spend on things you enjoy throughout the year.

To get assistance with developing a tax plan seek the advice of a qualified professional. Some great places to start are with a tax advisor, accountant, or financial advisor that specializes in income tax. These experts will have the background necessary to look at your current income and customize a plan that fits your financial goals using various income and tax scenarios.

You should work with professionals who have a background in helping clients to create tax plans. This will ensure that you are getting the right counsel to help you achieve the results you desire.