Living Well Nov 2022


Planning Featured


Everyone has certain expectations and dreams about retirement. Will your current plan meet your ultimate objectives? Today, more than ever, planning for retirement is a necessity. Proper planning and follow-through can help you avoid shortfalls in your income needs and ensure a smooth, secure transition from work to retirement.

retirement activities

Planning ahead means setting goals and deciding how they will be met within the framework of a changing financial picture. Many retirees find themselves torn between a satisfying lifestyle and one lacking many comforts that make life easier. Without a solid financial foundation, you may face some hard choices over your retirement years.

A successful financial plan, executed faithfully, will help make many of those choices easier.

As retirement approaches, consider these factors to best position yourself for an enjoyable retirement:

  1. Strategies Change. Regardless of your age, contributing to your 401(k) plan, Individual Retirement Account, or other retirement savings vehicle will enhance your likelihood of a comfortable retirement.
  2. An Aging America. Because people are living longer, your retirement assets must last longer and be able to accommodate cost-of-living increases. As a result, you may need to return to the workforce to help supplement your retirement income.
  3. Lifestyles of the Rich and Famous? Some individuals think they will be able to enjoy the same lifestyle they had during their working years. The likelihood, however, is that you may have to adjust living arrangements and unnecessary expenditures.

Regardless of when you plan to retire, it is important to be sure your goals and expectations are realistic. Reviewing your retirement savings versus your objectives can be a good first step in ensuring you're on the right path.


If the Internal Revenue Service suspects you underreported your gross income by 25% or more, it can challenge your return for up to six years. No statute of limitations applies if the IRS suspects you filed a fraudulent return.

Guilty Until Proven Innocent

When the IRS challenges your return, the burden of evidence verifying your claims rests entirely with you.

IRS Audit

You probably keep little of your financial documentation if you haven't been traumatized by an audit. If you have had one, you're probably terrified to part with a single receipt. The IRS is one of the few courts where failure to produce proof of your claims results in the assumption that you stand guilty.

Here are ways to protect yourself:

  • Save all financial documents used to create your tax return.
  • Retain a paper copy or receipt of any tax-relevant financial exchange. Scan these documents and archive them electronically or acquire them in an electronic format.
  • If your purchase came with a manual or warranty, store all documents in the same electronic and physical location. If the purchase constituted a business or other deductible expense, record the expense and why it justifies the deduction. Store this information with the receipts.
  • The IRS also regards bank or credit card records as insufficient documentation. Keep statements just long enough to reconcile your account.
  • Keep brokerage statements indefinitely for taxable accounts. You must report the cost basis, or original value, of any security you sell to calculate the capital gains tax.

Know Your Cost Basis

For a mutual fund with years of reinvested dividends: each dividend payment is part of the cost basis. As a result, sometimes you can compute the cost basis only if you access the complete transaction history.

Without knowing the cost basis, the IRS could treat the entire investment value as a gain.

Many custodians keep several years of electronic copies of brokerage statements and must send any known cost basis when you transfer to a new custodian. If your current custodian has the correct cost basis of your securities, you probably no longer need to keep brokerage statements. Better safe than sorry with the IRS, though.

Other Tips

Permanently keep records of nondeductible contributions to your individual retirement account. You may need the records every year in your retirement that you withdraw money to show that a portion of the withdrawal is not tax deductible. To avoid the hassle, consider clearing out nondeductible IRA contributions by converting your IRAs to Roth accounts. Keep partnership documents, contracts, and commission or royalty structures forever. This includes property records, deeds, and titles, especially those relating to intellectual property. It also includes transfers of value for estate planning.

Save all your tax returns. After you file, save the paper or electronic copies, or both, with the rest of that year's documents.

Once a year, scan and compile the records into PDFs and send them electronically to your financial advisor and the certified public accountant who does your taxes. Scanning the information gives you an electronic backup of the paper indefinitely.

According to the IRS, the chances of you being audited are about 1 in 160. Make sure you're ready.


A good advisor will spell everything out for you in ways that you understand. After all, it is your future that you are working on. 

Decision-making in both areas changes with circumstances and works best with consistent, objective planning.

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