Posted by Lauren Cappelli
Boomers, beware: You could be on the verge of blowing a big hole in your finances. Not from poor investment or budgeting moves; you probably know how to manage those financial affairs pretty well. No, we're talking about the danger of paying too much in taxes.
The tax pitfalls for baby boomers in coming years are likely to be steeper and more numerous than they were for previous generations at the same stage of life, advisers say. That's because the 75 million-plus people born between 1946 and 1964 control an unprecedented amount of money -- some $23 trillion -- and vast amounts of it will be on the move over the next decade or so.
For example, some $3 trillion is likely to be rolled out of 401(k)s over the next decade, and an estimated $4 trillion will be cashed out of retirement accounts in general. About $11 trillion is predicted to be inherited by baby boomers, and an additional $4.6 trillion will change hands between 2006 and 2014 through the sale of businesses, mostly by boomers.
By 2020, when the last of their generation has turned 55, they will own some $30 trillion in assets and be faced with the challenge of passing them to their heirs without also passing them large tax burdens. The danger: unwittingly letting more money than necessary become fair game for Uncle Sam.
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