I was just going over some estate planning matters, and found that some definitions used there were quite pertinent for people far from thinking of such things.
There are two concepts noted:
The example cited to explain when you have an efficient, but not effective transfer of wealth was to consider a 100% donation to charity. It would efficiently eliminate taxes due, but it would not meet goals of wealth transfer to heirs etc.
I was just chatting over in the Effective Tax rate thread, and the common question of 'how do I reduce taxes without retirement accounts popped up'. This is what most younger people think of, especially when earning in the higher brackets. Efficiently, they could pay into retirement accounts, but effectively, because retirement seems so far away it seems like a flawed approach.
My advice tends to be to try to help people reframe retirement savings, with lines of thinking such as partial rollovers that can be triggered during a sabbatical, or when launching a small business, or going back to college (sudden drop in tax tier events) and furthermore we shouldn't forget the 72(t) rules which allow for early distribution from retirement plans (to be used cautiously).
I think most people who are at least in their late 30s will wish they had put more into retirement accounts sooner, and most in their 20's think its a pipe dream... so, is it better to help realign thinking, or just let them learn from their own mistakes?
There are two concepts noted:
The example cited to explain when you have an efficient, but not effective transfer of wealth was to consider a 100% donation to charity. It would efficiently eliminate taxes due, but it would not meet goals of wealth transfer to heirs etc.
I was just chatting over in the Effective Tax rate thread, and the common question of 'how do I reduce taxes without retirement accounts popped up'. This is what most younger people think of, especially when earning in the higher brackets. Efficiently, they could pay into retirement accounts, but effectively, because retirement seems so far away it seems like a flawed approach.
My advice tends to be to try to help people reframe retirement savings, with lines of thinking such as partial rollovers that can be triggered during a sabbatical, or when launching a small business, or going back to college (sudden drop in tax tier events) and furthermore we shouldn't forget the 72(t) rules which allow for early distribution from retirement plans (to be used cautiously).
I think most people who are at least in their late 30s will wish they had put more into retirement accounts sooner, and most in their 20's think its a pipe dream... so, is it better to help realign thinking, or just let them learn from their own mistakes?