Most successful professionals believe they’re building wealth efficiently. They max out their 401(k), contribute to a 457(b), fund backdoor Roth conversions, and follow every piece of conventional advice their CPA provides.

Yet despite checking all the right boxes, many high earners will face a harsh reality in retirement: handing over 30–40% of their wealth to taxes when they need their money most.

The Tax-Deferred Trap

Ngoc Nguyen often explains that when advisors recommend maxing out tax-deferred accounts, they are encouraging clients to take a tax deduction today in exchange for paying taxes on potentially larger amounts later. For high earners, this can backfire significantly.

Example Ngoc often shares:

  • A surgeon earning $500,000 maxes out her 403(b) at $23,000, saving $8,050 in current taxes (35% bracket).
  • After 20 years at 7% growth, that $23,000 becomes $89,000.
  • In retirement, she owes $31,150 in taxes on that withdrawal.
  • Her “tax savings” of $8,050 became a $31,150 tax bill—nearly four times more.

The Five Wealth Leaks High Earners Face

Through her work with high-earning professionals, Ngoc Nguyen has identified five critical issues that silently drain wealth:

  1. Tax Traps: Tax-deferred accounts often lead to higher taxes later when retirees may have more money and potentially face increased tax rates.
  2. Limited Access: Restrictions and penalties make it difficult to access funds before age 59½ for opportunities or emergencies.
  3. Market Exposure: A market downturn during withdrawal years can devastate retirement income.
  4. Fee Drain: A 1% fee can erode $1.8 million in potential growth over 30 years on a $1 million portfolio.
  5. No Control: Required distributions, market uncertainty, and changing tax laws reduce financial flexibility.

The ERFT Solution

Ngoc Nguyen guides professionals toward what she calls the ERFT approach: Eliminate Risk, Fees, and Taxes.

She explains that high earners who understand the limitations of traditional planning can restructure their approach. Instead of automatically maxing out tax-deferred accounts, they may capture essential employer benefits while redirecting excess contributions to vehicles that offer both growth and flexibility.

This shift can significantly increase net retirement income—often resulting in tens of thousands more in annual spending power.

According to Ngoc, the key components include:

  • Tax-Free Compounding: Money grows without annual tax drag or future tax liability.*
  • Liquidity Without Penalties: Funds can be accessed for opportunities, emergencies, or early retirement without government restrictions.*
  • Principal Protection: Market downturns don’t erode accumulated wealth.*
  • Complete Control: No Required Minimum Distributions and full flexibility over withdrawals.*

*Results vary based on individual circumstances and proper implementation.

The $1 Million Difference

Ngoc often illustrates the impact with a simple comparison:

Two doctors each save $50,000 annually.

  • Doctor A (Traditional): Accumulates $3.17 million but nets only $2.06 million after taxes.
  • Doctor B (Tax-Free Strategy): Accumulates $3.17 million and keeps the full amount.

Difference: Over $1 million in Doctor B’s favor.

Red Flags Ngoc Encourages Clients to Consider

She advises high earners to reflect on the following questions:

  • Will you pay more or less in taxes during retirement than you do today?
  • Can you access your retirement funds before 59½ without penalties?
  • What happens to your plan if the market crashes the year you retire?
  • Do you know exactly how much you’ll keep after taxes and fees?

If these questions are difficult to answer confidently, Ngoc suggests it may be time to explore alternatives.

Taking Action

Ngoc emphasizes that strategies for high earners must be properly structured and continuously optimized. What works for a 35-year-old entrepreneur may not be right for a 50-year-old physician nearing retirement.

She reminds clients that conventional financial wisdom—often designed for average earners—frequently fails high-income professionals who face unique tax brackets, time horizons, and wealth-building opportunities.

For those ready to explore how the ERFT strategy could work in their specific situation, Ngoc Nguyen offers a complimentary strategy session to review their current plan and identify opportunities for optimization.

Click here to schedule your free strategy session and discover how to eliminate taxes, fees, and risk from your retirement planning.