Early retirement tax planning requires significant preplanning, like contributing to tax-advantaged investments that don’t have early withdrawal fees. Tax planning for early retirement means the client will need to save more money earlier in their career path because they’ll need the funds earlier than ordinary retirees, and they’ll need it to last longer than most.

Does Your Client’s Financial Plan Have Room for Early Retirement?

Most people would love to retire early, but few have the means, financial advice, and tax planning strategies necessary to achieve early retirement. In order to actively save for early retirement, the client needs to diversify how and when their savings will be taxed. Doing so can successfully navigate the two major unknowns:

1. How much of the client’s income will be taxable?
2. What will the client’s tax rate be after they retire?

Holistic financial planning includes planning for early retirement if that’s the client’s goal. A lot of people incorrectly assume that when they retire, their money and taxes go into autopilot, but this will get them into trouble with Uncle Sam in the long run. A good financial advisor will be able to identify specific steps the client must take in order to minimize their tax burden and maximize their wealth in retirement.

Does Their Portfolio Permit for Early Retirement?

The client should fund their Roth IRA to the maximum for early retirement. Although they will be taxed on any gains withdrawn before turning 59 1/2, they can withdraw their contributions at any time without incurring penalties.

Clients should focus on early retirement tax planning if they:

• Anticipate higher taxes in the future
• Have excess room in their tax brackets
• Could benefit from creating greater deductions now
• Coordinate between their financial plan and tax plan
• Want to eliminate avoidable taxes and penalties
• Need tax distributions from retirement plans

Smart Planning is the Key to Success Early Retirement Tax Planning.

One way to maximize income in retirement is to invest in early retirement tax planning by taking advantage of accounts and investments that don’t have fees for withdrawing early or a tax on distributions from retirement plans.

• Health Savings Accounts (HSA)
• Insurance Cash Value
• Pensions
• Real Estate
• Roth IRAs
• Stocks
• Tax Exempt Bonds
• Tax-Deferred Accounts
• US Treasuries

For early retirement tax planning, you should consider an appropriate blend of tax-deferred and Roth accounts, depending on the client’s current tax bracket.

Looking for more resources and tax efficient strategies for your financial clients? Sign up for our on demand seminar: How to Win Business through Tax Planning.

For higher tax brackets, there’s a good chance that the client’s tax rate will be the same as it is today or lower during retirement. So it might be a good idea to maximize tax-deferred accounts. Think about dividing retirement savings between tax-deferred and Roth accounts for clients in a middle tax bracket and consider maxing out Roth accounts on clients in lower tax brackets.

Every Situation has its Own Set of Tax Traps

One of the most important parts of early retirement tax planning is having a game plan in place to address any tax traps that pop up as well as any tax advantages you can leverage to the client’s benefit.

• Charitable Gifts
• Healthcare Premiums & Deductions
• Mortgage Changes
• Property Taxes
• Social Security Tax Torpedo

Early retirement tax planning follows the same principles as a traditional retirement plan—minimizing taxes and maximizing funds. Because early retirees will have fewer working years to accumulate wealth and a longer anticipated retirement than most, their plan requires an accelerated pace and scale.

To learn more about minimizing the tax on distributions from retirement plans, how to win business through tax planning, or the Tax Management Journey®, schedule a FREE 20-minute call today!

Financial Professional Use Only

The information provided in this presentation is not intended as investment advice or legal advice. The information provided is for informational and training purposes only. The information in this presentation was accurate as of the time of the material was created. Tax laws and rulings can frequently change. Please discuss the client’s current situation with an accountant or tax advisor.

The Bucket Plan® is a holistic financial planning device developed by C2P’s CEO and founder Jason L Smith.  The Bucket Plan works to incorporate all the client’s assets into one comprehensive financial plan that addresses individual needs by categorizing assets based on income, time horizon, and tax qualifications.

• Estate Planning
• Insurance
• Investments
• Medicare
• Retirement
• Social Security
• Taxes

The key to a successful bucket plan is strategically positioning and then protecting a portion of the client’s assets to buy a time horizon that allows them to invest the remainder for long-term growth. This is done with three buckets: Now, Soon, and Later.

Now Bucket

This is the client’s safe and liquid money that they keep at a bank in a checking, savings, or money market account. The Now Bucket has three primary purposes:

• Emergency fund
• Planned expenses over the next few years
• Income for the first year of retirement

The Now Bucket contains easily accessible funds for planned and unexpected expenses in the first few years of retirement. This bucket achieves minimal returns that likely will not keep pace with inflation, so don’t overfill it.

Soon Bucket

The Soon Bucket contains the money the client will use sooner rather than later. If a client is younger, this would be any money they could access penalty-free if they needed to draw from the Now Bucket. If they are retired or getting ready to retire, this is the money needed to fund the first retirement phase.

• Charitable Giving
• College Planning
• Expenses
• Health Care
• Insurance

The Soon Bucket should include an inflationary hedge, so there are enough funds to increase the income to keep pace with inflation when drawing from this bucket during the first phase of retirement.

Later Bucket

Now that the client has purchased a time horizon with the money in the Now and Soon Buckets, it’s time to review the Later Bucket. This is the money the client will not need to draw from until the later years of retirement, so we can confidently invest it in more long-term, growth-oriented investments.

• Annuities
• Estate Planning
• Legacy Planning
• Long-Term Care
• Medicare
• Social Security

As the client spends the money in their Soon Bucket over time, the Later Bucket replenishes it. In addition to growth and income, educating the client on long-term care, disability, and legacy planning in the Later Bucket is critical.

The Later Bucket is designed to house investments for long-term growth in the later stages of retirement. Long-term investments are more aggressive because the client has more time to cover any potential losses.

The Bucket Planning Process for Financial Advisors.

The most successful financial planners are always thinking about growth. They focus on how to attract prospects while expanding their services for existing clients through profitable business lines. Without adding a lot of personal time and effort, you can accomplish both simultaneously by building a tax practice within your financial advisory firm.

You don’t need to have a tax background to be successful. When you build out your own tax practice, you can start by hiring an accountant or CPA for your in-house team.

How to Build a Tax Practice as a Financial Advisory Firm

The goal of building a tax practice is to convert those clients to financial services clients eventually. Tax preparation allows you to get in front of customers once a year. This will enable you to review their taxes with them and provide an overview of how to include their tax planning strategy as part of a holistic financial plan.

The tax client might not be ready for your other services at first, but you’ll be there when they are.

Get Started with Your Tax Practice

There are several steps involved in starting a tax practice.

• First, you need to build the foundation before starting a tax practice. This includes everything from office space and software to pens and business cards.
• Next, you should hire a tax professional to prepare returns and market the business to bring in new clients.

Finally, make sure you hire someone to assist with appointment setting and other practice management tasks.

• In Stage 1, things will be modest. For the first year or two, you and two accountants will handle all the business at hand – between 100-400 returns.
• During Stage 2, you should be processing 400-1000 returns, so you’ll need to hire an additional advisor and possibly a tax practice manager.
• By the time you reach Stage 3, your office will have 1000-2000 tax clients, with the potential addition of another advisor and additional accountants.

Plan your growth — get started now!

Renting a Tax Practice vs.  Owning a Tax Practice

If you’re unsure whether building or buying a tax practice is the right move for your financial advisory firm, consider the following:

1. One way to find out if building a tax practice or buying a tax practice will work for your financial advisory firm is to partner with an existing tax firm. You do this by offering tax management services and holistic financial planning to their clients in exchange for their accounting services. You or one of your financial advisors will then meet with the clients to go over the return and lay out tax planning strategies for the coming year.
2. Develop a relationship with a CPA or tax firm in your community to borrow their clients. After you have nurtured and developed your bond with them and their customers, you can start to look for longer-term solutions, like purchasing a tax firm or building your own tax practice. Set up a cost-sharing arrangement so that a percentage of any new business goes back to the host tax firm as part of the agreement. This gives you an excellent platform from which to attract new clients to your wealth management firm.
3. Consider the Find, Mined, & Grind mindset:

• Find brings the client in.
• Mined formulates recommendations and closes the sale.
• Grind manages the financial services portion moving forward.

As with building a tax practice and buying a tax practice, there are also advantages and disadvantages to renting one:

Advantages to partnering with a tax firm

• You are approaching an audience that is already made up of tax clients.
• Staffing is already managed, so you don’t have the expense of added accountants for tax season.
• The tax firm can serve as your second office for meetings with potential financial services clients.
• If the tax practice owner ever decides to sell or retire, you’re already ingrained as the next buyer.

Disadvantages to partnering with a tax firm

• Limited penetration in the surrounding area since you don’t control the marketing.
• You have little to no say in the staff hired.

Why Successful Financial Advisors Choose to Offer Tax Planning

A proven way to grow your existing financial services business is to add a tax practice. Preparing taxes and providing tax advice is one of the most significant opportunities that wealth professionals have today.

Delivering ongoing advice (taxes aren’t a one-time thing) and implementing effective, deeper tax management strategies helps you stand out as a unique, multi-solution financial advisor. It also showcases your firm’s capabilities to a new group of potential clients.

Now that you have tax clients, you can use their returns to find areas where you can save them money. This presents an opportunity to provide additional services, like strategic retirement and legacy planning, which you can explore further with The Bucket Plan®.

By putting solutions and strategies in place to anticipate tax changes, you will differentiate yourself from other financial advisors and tax professionals, allowing you to charge more considerable financial planning fees.

Check out the Tax Management Journey live training to learn more about incorporating tax strategy into your clients’ overall holistic financial plan.

Financial Professional Use Only

The information provided in this presentation is not intended as investment advice or legal advice. The information provided is for informational and training purposes only. The information in this presentation was accurate as of the time of the material was created. Tax laws and rulings can frequently change. Please discuss the client’s current situation with an accountant or tax advisor.

A comprehensive financial plan can ease the client’s mind and decrease anxiety around their finances in both the short and long term. Studies show that people feel more secure when they have a documented holistic financial plan like The Bucket Plan® to rely on.

The solution to any individual’s economic puzzle is holistic financial planning. The wealth professional can develop a one-of-a-kind proposal to maximize their customer’s wealth, health, and happiness while minimizing any potential tax pitfalls and managing gaps in the market.

What Makes a Comprehensive Financial Plan?

A comprehensive financial plan takes an in-depth examination of the client’s current financial situation. The wealth professional develops a strategy that will allow the client to live the life they want based on their individual goals and abilities. It plans for and accommodates events that occur in the client’s life.

Whether you follow cash-flow based financial planning or another method, your goal is to create a holistic financial plan that sets the client up for success now and in the future.

Cash-flow based financial planning takes a client’s current financial position and uses predictions and forecasting to determine their cash flow plans for the present and future. Cash-flow based financial planning gives you more freedom to explore holistic financial planning solutions you might otherwise not consider.

A Comprehensive Financial Plan Includes these Elements

The Bucket Plan Process is different from other financial advisor strategies because it’s based on internal and external factors—including changes in the market, job loss, birth of a child, death of a spouse, change in marital status, etc. It considers how a customer’s investment goals will continue to change and works to ensure the best outcome at each phase of the client’s life: Now, Soon, and Later.

The Now Bucket is for liquid cash. This is where sufficient funds are set aside for a year’s worth of income, an emergency fund, and sufficient money for expected expenses.

The Soon Bucket is the more conservative capital that’s designed for the first ten or so years of retirement, plus an inflation hedge. It needs to be much less volatile but invested to outpace inflation without subjecting it to the fluctuations in the stock market.

The Later Bucket is the client’s long-term growth designated funds.

What is included in this plan?

• Assets
• Cash Flow Analysis
• College Planning
• Debt Evaluation
• End-of-Life Preparation
• Expenses
• Family Estate Organizer
• Income
• Medicare
• Retirement Plan
• Risk Assessment
• Social Security
• Tax Planning
• Goals
  • Now
  • Soon
  • Later
• Insurance
  • Auto
  • Disability
  • Health Savings
  • Home
  • Life
  • Long-term Care
• Investments
  • Bonds
  • Fixed Indexed Annuities
  • Mutual Funds
  • Real Estate
  • Stocks

A Comprehensive Financial Plan is Easy to Adjust

For the client, a good comprehensive financial plan should be as easy as going in for an annual physical. The patient (client) meets with their doctor (financial advisor) for a checkup where they discuss any new issues that have come up recently.

A doctor might make adjustments to the patient’s prescription dosage, suggests new products, or run additional tests. Likewise, the financial advisor will alter the financial plan to meet the new needs of the client, suggest new products, or run market simulations to optimize success.

At C2P Enterprises, we follow The Bucket Plan methodology for our comprehensive financial plans.

The Bucket Plan® Best Interest Process is an asset allocation system wealth professionals use to develop cash-flow based financial plans that their clients will understand. It has been defined, refined, and tested by our model offices. It includes a set of easily replicated, proven processes for your business, no matter the size or scale.

After completing The Bucket Plan live training, you will transform your business with simplified financial planning and an increased closing ratio.

Schedule a 20 Minute Call

Financial Professional Use Only

The information provided in this presentation is not intended as investment advice or legal advice. The information provided is for informational and training purposes only. The information in this presentation was accurate as of the time of the material was created. Tax laws and rulings can frequently change. Please discuss the client’s current situation with an accountant or tax advisor.

Enterprise Solutions

Holistic Wealth Management Simplified

C2P and our affiliated companies are dedicated to bringing holistic wealth management to American families nationwide. We strategically align investments, insurance, tax management, estate planning, Social Security, retirement income, and healthcare planning into a single comprehensive, coordinated, holistic plan.

Marketing & Brand Management

C2P Advisors benefit from marketing and communications support that they use to build strong relationships with high-net worth clients including:

• Marketing Automation
• Brand Strategy
• Lead Generation
• Search Engine Optimization
• Social Media

Technology

We bring together innovative technologies and investment solutions, actively aligning our organization with industry partners who share our desire to provide the best service possible to registered investment advisors  with:

• Financial Planning Software
• Advanced Portfolio Analytics & Reporting
• Billing Administration
• Product Due Diligence and Selection

Investment Operations

C2P’s process-drive approach gives advisors the tools they need to create coordinated, holistic financial plans.  Our advisors count on us for:

• Advisor Trading Capabilities
• Platform Technology
• Multiple Investment Managers

Combine Multiple Divisions with Industry Best Practices.

Financial advisors demand control over their business. C2P helps advisors who want to grow their firm with effective business solutions, including practice management, marketing programs, expanded business offerings, and holistic processes.

Larger enterprise organizations benefit from key integrations to their investment platform, core strategic models, specialized strategies, and technology stack. This industry-leading platform gives C2P advisors an advantage against their competition and their clients a superior investment experience.

Become a C2P Affiliated Advisor

If you are an independent financial advisor searching for the tools and resources needed to provide holistic financial plans for your clients and a trusted Registered Investment Advisory partner— C2P is your solution.

Our commitment is to support our affiliated advisors as they advise in the best interest of their clients. To do so, we provide proven financial planning processes, technology, training, and support to you to help you deliver the best solutions to your clients.

Tap into planning tools and training, such as The Bucket Plan® holistic planning process, and receive support from our Certified Financial Planners (CFP), tax professionals, business partners, and training resources to help you and your clients every step of the way.

Our process-driven business will give you the tools to create coordinated, holistic financial plans that incorporate your clients’ investments, insurance, tax, estate, Social Security, retirement income, and healthcare planning needs.

Individual & Team Solutions

Holistic Wealth Management Simplified

C2P and our affiliated companies are dedicated to bringing holistic wealth management to American families nationwide. We strategically align investments, insurance, tax management, estate planning, Social Security, retirement income, and healthcare planning into a single comprehensive, coordinated, holistic plan.

Supporting Independent Advisors in all Aspects of their Investment Advisory

C2P helps financial advisors identify key opportunities for growth, whether it be in growing their practice, expanding their advisor offerings, implementing top marketing strategies, or creating a truly holistic investment strategy.

Our commitment is to support our affiliated advisors as they advise in the best interest of their clients. To do so, we provide proven financial planning processes, technology, training, and support to you to help you deliver the best solutions to your clients.

Become a C2P Affiliated Advisor

If you are an independent financial advisor searching for the tools and resources needed to provide holistic financial plans for your clients and a trusted Registered Investment Advisory partner—C2P is your solution.

Tap into planning tools and training, such as The Bucket Plan® holistic planning process, and receive support from our Certified Financial Planners (CFP), tax professionals, business partners, and training resources to help you and your clients every step of the way.

Our educational resources will give you the tools to create coordinated, holistic financial plans that incorporate your clients’ investments, insurance, tax, estate, Social Security, retirement income, and healthcare planning needs.