I know what a vast majority of you are doing today: You’ve gotten over your fear that your accountant has forgotten you. You’re writing checks to the federal and state governments and loathing it. You’re promising you’ll never wait until the last minute again to get all your documents to your accountant. You’re in a mild panic about how you’re going to fund your qualified retirement plans (SIMPLEs, IRAs, etc.) And if you’re in a really bad space, you’re threatening to never make another dime because you’re sick of paying taxes to governments that can’t seem to govern.
Remember that taxes do good things and you do have choices
First, breathe. Lighten up. We’ve all been there in one year or another. Find gratitude. The taxes you pay do good things – libraries, schools, roads, people to fix the roads, street lights, police, courts, and the list goes on. These things may not be perfect, but for the most part, they’re functional.
Second, remember that you have choices. Here’s something else a bunch of you did this tax season: You funded your qualified retirement plans. When you looked at the difference in your tax bill based on whether you funded that plan or not, it felt like a no-brainer to fund it. You thought, “Look at all the money I saved in taxes!” You probably thought with pride, “I put money away for retirement just like I’m supposed to and look at how much I put away!”
If you had these thoughts, I want you to contemplate these thoughts: (1) If you believe taxes are going to remain the same or go down for you in retirement, it makes sense to fund qualified plans. But if you believe taxes are going up, you’ve just “kicked the can down the road,” when taxes in retirement will likely be much higher. Did you really save money? Frankly, taxes are on sale right now. (2) You may have been better off funding a tax-free retirement with after-tax dollars, rather than a qualified plan, so that when you go to retire, you’ll have fewer taxes to pay, less fear about tax deadlines, and a simplified tax return. Starts to make retirement look even better, doesn’t it? Remember that you have choices about how you earn, invest, and spend your money.