Are You Prepared to Take Advantage of the Soaring Stock Market?


With all the turmoil going on in Washington and new reports of wrong doing popping up every day, you might not have noticed the stock market lately. However, if you haven’t been paying attention, the market is doing quite well. That is good news for everyone, but it could be especially beneficial to those about to retire.

If you are nearing retirement, and you plan carefully, you could line things up just right to get a huge tax break. When you call it quits and no longer receive a salary, you could end up paying no money on your long-term capital gains. That means you can get away with some nice gains and not give the IRS any of it.

Not everyone is eligible for this tax break, however. Only those in the bottom two tax brackets can get the 0 percent rate. You also have to plan your withdrawals carefully, because if you cash out too much at once, the influx could push you to a higher tax bracket and thus eliminate the 0 percent rate.

Therefore, you need to be mindful of when you sell and do it at the right time. The first two years of your retirement is usually a good time to try this. You also need to pay attention to your full income for the given year so you do not withdraw too much and trigger a higher tax bracket rate.

After you withdraw the money it’s yours to use however you like, but you might also consider buying the asset right back, which allows you to keep your current asset allocation. This could mean lower taxes now and increased future capital gains down the road.

The post Are You Prepared to Take Advantage of the Soaring Stock Market? first appeared on Advisors to the Ultra-Affluent – Groco.