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Kansas City Retirement Planning

Kansas City retirement planning includes considering potential taxes and other expenses you might not be aware exist. For example, brokerage commissions and fees can be surprisingly costly. Asset management fees can hinder your long-term wealth building. Often times, these fees aren't really justified. It's important to be aware of hidden fees when you're planning your Missouri retirement planning investment strategy.

Taxes can put a serious dent in your retirement savings. Understanding the different kinds of taxes on investments can help you better prepare for your later years. Taxes are a significant part of you Kansas City retirement planning. From keeping taxes to a minimum on your retirement accounts to anticipating the final tax bite, you need to be aware of how taxes impact your financial planning.

Retirement Investments and Frictional Expenses

First and foremost, if you have a broker manage your stocks, you need to consider the fees your incurring. Even if it seems like a small amount, remember that over the longterm, it adds up. Also, more importantly, consider what would happen if you invested that money instead? Don't undermine your retirement savings with brokerage fees!

Of course, in certain situations, such as with trusts, estate planning, and other potential components of your Kansas City retirement planning, the fee is justified. When you hire a Kansas City professional to help you with financial planning, consider what, exactly, he or she is doing. If it's work you could do, why pay the outrageous fees?

When you choose to buy or sell an investment, a certain percentage of your principal will be reallocated to a bank or brokerage company (called a "market maker"). The reallocation is called the "spread" and it's the difference between the ask price (what the buyer wants) and the bid price (what the buyer is willing to pay). The cost of a spread can significantly impact your future wealth and impede your Kansas City retirement planning.

Capital gains tax is a tax you pay when you sell something and gain income. As a general rule, you should avoid selling or buying unless your sure that your new investment can provide significant income. Or, if you're at a certain stage of your Kansas City retirement planning, and you want to sell certain assets or investments. Still, be sure you don't underestimate the capital gains tax.

Mutual funds also involve significant fees. In fact, mutual funds typically don't outperform index funds because of management fees and sales loads. Furthermore, index funds don't have capital gains taxes. If mutual funds are part of your Kansas City retirement planning strategy, be aware of the secret fees involved.

Retirement Tax Planning

Taxes are no fun. Taxes are especially tough when you're trying to plan your Kansas City, MO retirement. Taxes can severely deplete your savings, and surprise you if you're not careful. Obviously, you have to pay taxes, and trying to evade the taxman is a very abad idea. That being said, if you understand how taxes work, you can keep your Kansas City, Missouri accounts healthy and happy, and avoid unexpected tax bites.

You can expect two kinds of taxes on your investments: capital gains tax and dividend income tax.The capital gains tax occurs when you sell an asset for profit. For example, if you sell your Kansas City, Missouri home, for more than you bought it for, you can expect to pay taxes on the difference.

If it's an investment, you can also expect to pay taxes on your profit. There are two types of capital gains taxes to consider: long-term capital gains and short-term capital gains. Long-term capital gains taxes are less expensive than short-term capital gains taxes. Therefore, if possible, you should keep all investments for at least a year.

Most likely, your Kansas City retirement planning strategy will involve primarily long-term investments, so it should be easy to avoid short-term capital gains taxes. If you're considering selling an asset, you may want to consult with a Kansas City, MO tax specialist. He or she can help you figure out what income tax bracket your in, and what kind of capital gains tax you might expect.

As for dividend tax, you can expect your dividends to be taxed at the same rate as your income. However, if you have a dividend reinvestment plan, you won't pay taxes. You might talk to a Kansas City retirement planning specialist about how to properly invest your dividends in a Roth IRA or 401(k) so you don't have to pay annual taxes.

Talking to a Kansas City, Missouri financial planning advisor can help you prepare yourself for the tax bills on your income. Even if you have a significant amount of savings and your Kansas City retirement planning is going well, you shouldn't underestimate taxes. If you plan carefully, you'll be much better off.

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