Given that recent tax reform was the most extensive in several decades, the effects are predictably being examined from all angles. One more way it seems to be affecting the wealthy: many are rethinking their financial strategies.
In a recent survey, around six out of 10 affluent Americans reported they are likely to adjust their financial plans as a result of the Tax Cuts and Jobs Act of 2017.
Results also suggest most think it would be wise to seek help in doing so. Over half of respondents (53 percent) think they would be more likely to reach financial goals if working with an advisor, specifically one with tax expertise such as a CPA financial planner.
The survey, administered by The Harris Poll for the American Institute of CPAs, was conducted before policy changes went into effect. It examined adults with either $250,000 of investable assets or a household income of greater than $200,000.
“Given the sharp bite taxes can take out of returns, the importance of structuring investments and income-generating savings in a tax-efficient manner cannot be overstated,” said Andrea Millar, CPA/PFS, director of the AICPA’s Personal Financial Planning Division.
Respondents overwhelmingly agreed, with 90 percent indicating effective tax planning would be very or somewhat important to financial security in retirement.
When ranking the most crucial aspect of their financial plan, 68 percent said retirement savings and income, 43 percent said tax efficiency of savings and investments, and 39 percent said healthcare planning. Another 36 percent were most concerned about achieving investment return goals, and 26 percent were focused on estate planning.
“A tax efficient plan utilizes investment vehicles, such as municipal bonds or 401(k)s, that grow in a manner that allows the taxpayer to maximize the amount of income they keep,” according to the report. “While affluent Americans recognize tax efficiency as a crucial aspect of their financial plan, on average, only 43.5 percent of affluent adults’ total investments and retirement savings are in tax qualified accounts or tax favored investments.”
Jessa Claeys is a writer, editor and graphic designer.
