Retirement Risk: Tax-Efficient Planning
October 17, 2024
No one is a big fan of taxes. Sure, they are used to help pay for some things you need and use, but it is fair to say that anyone’s day would be brighter if they sent less of their money off to the government.
Keeping an eye on your tax situation is even more important in and around retirement since new vehicles become a part of your revenue stream. Consider whether these tax-reduction strategies fit into your ideal financial plan while preserving more of your money:
- Convert Accounts: If you are in a position to take on a larger current tax burden, you can roll existing accounts like a traditional 401(k) into Roth accounts. This requires paying the taxes when contributing but will be available as tax-free withdrawals in retirement.
- Social Security Smarts: Another tax-saving option for those with a comfortable nest egg is to determine if it is beneficial to withhold benefits. Some people will pay tax on up to 85%1 of their benefits, but altering income levels can significantly reduce that percentage.
- Utilize Investments: Everyone will have a unique investment situation that create different tax ramifications. Long-term capital gains2 are taxed at rates of 0, 15, or 20% depending on your income. Similarly, depreciation on real estate investments can offset some taxes.
- Charitable Giving: For many, part of enjoying retirement is to share their wealth with others. Giving to qualifying organizations is a great way to leave a legacy. It makes sure that more of your money ends up where you want it.
Please contact us today and schedule your complimentary retirement planning consultation. Hear about options to provide for future health needs while staying focused on pursuing your retirement goals.