The other day I was speaking to a room full of CPA’s, Enrolled Agents and Tax Preparers about ways tax returns can lend themselves to housing wealth conversations. Below are 15 micro insights derived from a client’s tax return.

15 Micro Insights | Housing Wealth Conversations

Does Your Client:

• Own a home?
• Have an existing mortgage payment?
• Have the ability to sustain the payment? Have the desire to make a payment?
• Have their Social Security being taxed because of too much provisional income?
• Have a concern about income causing them to creep into a new tax bracket?
• Have sufficient assets to meet life expectancy (and 5 years beyond)?
• Have sufficient income to maintain their current lifestyle?
• Have any income concerns with the death of a spouse or death of pension?
• Have sufficient tax advantaged liquidity for emergencies or expenses?
• Have a savings draw/frequency pattern that is sustainable?
• Know which asset they will convert to income to cover the costs of long term care?
• Ever talk about downsizing to a house that may be more suitable as well as possibly providing them more savings?
• Desire to leave a tax free legacy to their heirs through a Roth Conversion but is not sure how to cover the taxes?
• Have a backup plan for risk and volatility for their retirement savings?
• Ever wish they had another growing tax free asset to draw from if they needed?

There are more insights and housing wealth conversations that could be derived from a tax return. Though I don’t have time in this post, I do cover all of them in my Housing Wealth Book Series.

For now, let’s take a look at one example below

Tax Return Case Study

Bill and Sandy (65/63) scheduled a review meeting after leaving their accountant’s office. As their advisor was reviewing the return, he asked them about their retirement dreams and if they had changed since Bill’s retirement.

They both expressed contentment with their decision, but after more conversation and questions, they shared that they were “a little” concerned about unexpected expenses, long term care or if they really had enough money to live as long as Kirk Douglas!

The advisor noticed they were still paying a $1,500 mortgage and asked if they were comfortable making that payment for the next 17 years. They both said, “yes”.

He then ask a simple question:

“Since you are already making a payment, if you had a choice, would you rather your payment be mandatory or voluntary?’

They said “voluntary of course”. He then asked them, if they would like to SEE what that could look like and how it might address the (3) concerns they listed earlier?

He showed them a Customized Housing Wealth Illustration that he had prepared in advance of their meeting.

They were amazed how one simple strategy, that didn’t required them to change any financial behavior could produce such a shift.

The content of this blog is for financial advisors and professionals only and is not intended for consumer use. Names, cases, and scenarios are fictionalized for illustrative purposes. The opinions expressed here are those of the author alone and do not reflect the views of any affiliated entities or individuals. Don Graves, NMLS #142667.