Tax season is in full swing, and it can bring some uneasy thoughts. “How much will I get back?” “How much will I owe?” “Am I forgetting anything?” “What can I expect next year?”
In a recent team meeting, one of our firm’s partners shared a question from a client that’s often not heard, “Why is my tax bill so low?!”
This client had been taking significant IRA distributions since the beginning of retirement as they had settled into a routine of travel and other retirement leisure. Of course, IRA distributions are generally going to be taxed as income, and the client became accustomed to paying a steady tax bill each year. In recent years, their travel slowed and their expenses correspondingly decreased, but their regular withdrawals had not.
What separates the ordinary from the extraordinary? I believe consistently doing the best with what you have with daily choices and actions. In a word: habits!
When you use the power of choice and habit, outside forces play a secondary role. It doesn’t matter how educated you are, what occupation you choose, how much you earn or who you know. What does matter is what you do with what you have today.
Habits Make the Difference
For instance, take Gladys Holm who, as a secretary, earned no more than $15,000 a year throughout her life. Yet she left $18 million dollars to a hospital for heart disease research when she passed away! Gladys had the opportunity to invest in her employers’ stock over her career and she did. She also had the opportunity to invest in other stocks (like all of us do) and she did. She had the opportunity to participate in her employer’s stock option plan and did. Notice the trend… she had many opportunities and took advantage of each one to the degree she could with her modest salary. She became known for driving her fire-engine red Cadillac and delivering teddy bears to children at a local hospital in her Chicago neighborhood.