MAKING CENTS: Five strategies for tax-efficient investing

Once upon a time, retirement was defined as sipping lemonade on the front porch

waiting for the grandchildren to visit. Today, however, things are different. The grandchildren may be visiting the house to feed the cat or walk the dog because the grandparents are busy. They are traveling, going out to dinner, and working.

Some work to supplement their cash flow. Some work to support their grandchildren’s 529 accounts. And some work because they simply love what they do – either for pay or as a volunteer.

The key to making this fulfilling is to find an organization where your passions are awakened. It will be most beneficial to the organization and their constituents. . From a financial perspective, there is no compensation for volunteer positions, but that does not mean that it will not cost you money to participate.

You may incur travel expenses, which may be deducted as a charitable contribution on your tax return if you itemize. You may have other out of pocket expenses on behalf of the organization. To simplify your deducting expenses, consider writing checks directly to the institution as a contribution and ask them to pay their own expenses.

You should also get a legal opinion to be sure that you are protected against any liability arising from your service. Be careful when investing time with an organization that does not have proper insurance, disclaimers and other protections in place for its volunteers.

If your work is for money and you need it to support your lifestyle, congratulations. You’ve made one very significant decision to stay fiscally fit. But if you are working to fulfill a challenge or fund a lifestyle improvement, you may have the luxury of making a few fiscal maneuvers that may help.

Just because you’ve retired once doesn’t mean that you cannot contribute to a new 401K plan. .

If you are doing consulting for one or more companies, you are likely to get paid as a consultant and receive a form 1099 at the end of the year.

From here you will file a self-employed tax return (typically schedule C of form 1040) which also allows you to deduct your reasonable and ordinary expenses in connection with the production of that income. Amongst the allowable expenses is the opportunity for a retirement plan deduction. With good planning, it is possible to establish a plan for you as the sole employee where the deduction can be as large as 100% of your net income.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial. Member FINRA/SIPC. He can be reached at 781-849-9200.