Investors who build tax diversification, get savvy with RMDs, mind state taxes, and avoid the 'tax torpedo' can lighten their tax loads considerably in retirement.
Proper planning is all about thoughtful planning for the now, for the later, and for the “after I’m gone” stages of life. So be diligent about your everyday finances, and plan for your final estate, since you never know “when.” While you are at it, also consider your retirement and end-of-life finances. To keep things on an even keel, it pays to consider taxes in structuring your late-in-life finances, and even more so to limit those taxes.
There are a lot of variables in play when it comes to budgeting for retirement, to include ever-lengthening life spans and ever-increasing medical bills. No one said it would be easy. One variable you will not want to ignore is taxes and how they will affect you.
For some advice on how to make the finances last, and how to preserve wealth both for yourself and your heirs, be sure to read a recent article in Morningstar titled “6 Ways to Curb Taxes in Retirement.”
The six ways? Roughly:
Tip 1: Diversify Your Assets by Tax Treatment
Tip 2: Consider a Roth Conversion--Even in Retirement
Tip 3: Get Savvy With RMDs
Tip 4: Mind State Taxes, Too
Tip 5: Bundle and Time Your Deductions
Tip 6: Avoid the 'Tax Torpedo' [i.e., Social Security tax payments]
After you have read the original article, consider your own finances, or those of your elderly loved ones. Retirement is an important stage in life, one requiring careful financial planning so you do not outlive your money. Taxes are a major threat to your retirement financial security.
Reference: Morningstar (March 1, 2014) “6 Ways to Curb Taxes in Retirement”
How do your end-of-life finances coordinate with your plans for your estate? We can help coordinate it all. Give us a call at (978) 342-1914 or visit us at www.dellamonaca.com.