Low Income Year
Low Income Year
by Caitlyn Driehorst
Published: June 27, 2025
There’s many reasons why talented, successful people may have a low-income year: perhaps you were laid off. Maybe your new business is still getting off the ground. You could be taking time off to care for a loved one, or in graduate school, or even on sabbatical.
But whether this is “change you chose, or change that chose you,” losing a steady paycheck can be disorienting not only for your budget, but also for your sense of self-worth and agency.
However, as financial planners, we actually get excited when someone has a lower-income year. In fact, some of the financial strategies are so strong, that intentionally planning a low-income year can be worth it for some people (assuming it’s consistent with other goals.)
This power comes from three main sources:
You’re in a lower tax bracket
You’re eligible for certain income-qualified opportunities
You have the time to knock out personal admin
Before we jump in…
Register for our upcoming webinar, “The Power of a Low Income Year”
We are rerunning our most popular webinar to date, updated from follow-ups and reviews. This webinar is referenced in the blog article below, so register now to get in on the conversation.
The webinar will cover:
The powerful tax and investing moves only available in a low-income year
Specific credits only available below a certain income level
If you do need to jailbreak an investing account, which piggy bank should you tap first to minimize harm?
All of our webinars feature BCG-alum slide decks, helpful PDF handouts and recordings sent to you via email after the session.
Register to join our session on Tuesday, July 15, 2025, at 9:00 Pacific / 12:00 noon Eastern.
Opportunities associated with lower tax brackets
Roth conversions are obviously the first opportunity; we’ve written about those here [link to blog post], and we go deep in our webinar.
In our webinar, also touch on capital gains harvesting; while tax loss harvesting is written about more commonly (and something we love for our clients via our Betterment for Advisors platform), in a low income year, you may be able to realize up to ~$95,000 in long-term capital gains without owing a nickel of taxes. (If you used to work for a tech company and have unsold RSU / ESPP stock, this may be especially interesting for you!)
One reason I love this webinar? We don’t just tell you what these opportunities are; we explain how income taxes and capital gains taxes work in the first place, so you have your feet under you when you try to understand these more advanced moves.
Opportunities you may only qualify for when your income is lower
“Backdoor Roth” must be the coolest name in personal finance; it’s the ship that’s launched a thousand Instagram content creators. But if you’re in a low-income year, you don’t need a backdoor; you can go straight in the front door, and lock in your low income tax rate now and never owe taxes again on those dollars, assuming you withdraw in retirement.
In our webinar, we also review other opportunities, such as a credit to offset premiums on health insurance purchased on the federal exchange. The more you know!
Time to knock out personal admin
Waiting to hear from job applications can be agonizing. Put your nervous energy to use by taking this time to get your affairs in order. Old 401(k) accounts hanging out, where you may forget them some day between now and 2045? Subscriptions you never cancelled? Have you updated your account beneficiaries and organized your financial paperwork? Now is the time!
In our webinar, we’ll walk through our top recommendations for organization moves, and provide a downloadable PDF handout with a complete list.
Should you hire a financial advisor in a low income year?
It’s one of the most cliche squabbles for a couple: one person hires a housecleaner, the other person busily sets to work cleaning the house before the cleaner arrives.
I’m the latter in our relationship: “Jonathan, you don’t understand, what will the cleaners think if they see our kitchen so messy?”
“They’ll think that’s why they’re here? I’m confused.”
At RightWise, we often talk to prospects who want to hire a financial advisor to help them out with their big strategic questions – but only after they’ve figured everything out first and done “the easy stuff” on their own. But then, life is busy, they get stuck on a question (for example, dividend treatments for rollovers?), and they end up feeling bad, nothing is done, financial chores remain unfixed – and we miss out on an awesome new client.
If you’re between roles, this could actually be a great time to hire a financial advisor:
Knock out all the household admin and chores that need done, including optimizing your existing investments
Understand your current runway and how any missed savings may affect your retirement
Negotiate a new compensation package and understand the benefits of a new role – especially if there’s any stock compensation, we love that
There’s absolutely such a thing as too much financial ambiguity whereby we may not be able to add value; in that case, we’ll let you know and hope you return to us when things are settled. But for many people, a time between roles is a great time to develop a relationship with a trusted advisor, to do the hard thinking to define future financial goals – and to knock out all the chores associated with that transformation.
Learn more about establishing a financial strategy with room to grow
Join us for the next session of our webinar, “Personal Finance 102.” You’ll leave the session with a better idea of where you’re at, and how to get where you want to go.
"These webinars are especially meaningful to me, as they provide a valuable platform to discuss financial education and other important topics that impact people’s daily lives. I always look forward to the conversations they spark."
-Chris Casale, financial advisor
We are not attorneys and this article is intended to be educational and informative, not legal advice. As we like to say, “This is where your research should begin, not end.”
Author: Caitlyn Driehorst , Chris Casale , Hannah Farrow
Date Published: 6/9/2025
