Our team brings extensive experience serving DTE Energy employees, some of whom began their careers with MCN Energy. We often find that when we initially meet with new clients, people don’t realize the importance of tax strategy as part of their financial plan. Most families have a more complex financial picture than they realize until they see a comprehensive view. While tax strategy is different for each individual and situation, there are a few fundamentals that provide a framework to minimize taxes and help you enjoy the benefits of your hard work.
Cash Flow Planning
It is important to see a holistic view of your cash flows, not only today but in the future. Cash flow changes significantly after retirement, and we need to anticipate the tax impact of your income streams as they change. In the working years, your paycheck comprises your income, and your salary determines your tax bracket. After you retire, income takes on different forms. You will receive income from Social Security, your retirement accounts, other investments, and your pension. You may have other sources of income that we need to consider, such as inheritance or income from your spouse’s job or retirement plan. Since there are different income streams to consider, we need to anticipate when you will need to draw on each income stream in order to avoid overpaying taxes.
Timing Your Income Streams for Tax Efficiency
There are different ways to draw on the same income sources, depending on your specific goals. If your goal is to retire early, you may need to purchase additional healthcare coverage, and your Social Security benefit may be reduced. On the other hand, if your goal is to gift wealth to your children, we will need to evaluate the best vehicles and strategies for making tax-efficient gifts. At each step of the process, we have to factor in how much income you’ll need, which income source will cover your expenses, and how your income will be taxed during each stage of your life.
Lay the Foundation Early
Tax planning is a long-term effort. You need to think not only about how to minimize your tax bill each individual year but also consider the long-term tax consequences. Some strategies rely on paying more taxes now to realize greater savings in retirement. Other strategies may involve deferring taxes now and investing the available cash. Your income brackets will change over time, and capital gains tax will enter the picture when cashing out appreciated assets. We need to weigh the tax impact when considering factors such as whether to take a lump-sum pension payment or a lifetime annuity. The key to effective tax planning is to start early and review your plan regularly. The sooner you start, the more attractive the options you will have available.
We Are Here to Help
We enjoy working with DTE Energy employees and helping you build your future. We have had the privilege of helping hundreds of DTE employees pursue their goals. If you’d like to explore how we can show you how to get the most value from your DTE benefits package, let’s talk soon so that we can get to know more about you. Call
Robert Moore is senior partner, financial planner, investment adviser representative, and co-owner of Center for Wealth Management, an independent, fee-based wealth management company based in Troy, MI. With more than 15 years of experience, Rob provides customized advice and solutions that are in the clients’ best interest. He strives to always go above and beyond his clients’ expectations, helping them retire with more confidence than they had before, and invest their time and energy in what’s most important to them. Rob specializes in working with DTE Energy employees, helping them maximize their benefits so they can reduce taxes, prepare for retirement, and protect their families through a comprehensive planning process. Rob graduated from Michigan State University and holds the CERTIFIED FINANCIAL PLANNER™ and Chartered Financial Consultant® (ChFC®) certifications.
Rob is known as a diehard family man who enjoys spending time with his beautiful wife, Jill, his daughter, Brookelyn, and his son, Brayden. When he’s not working, you can find him playing basketball once a week, squeezing in a round of golf, and watching college football and basketball with friends and family. He is passionate about enriching the lives of others through his church involvement and service at a community addiction program. Learn more about Rob by connecting with him on LinkedIn.