Three Crucial Tax Rules for Retirees

As retirees embark on a new chapter in their lives, understanding the intricacies of tax rules becomes paramount for effective financial planning. The last thing you want is a surprise at tax time in the spring! As you prepare to retire in the next few years, learn how your tax situation will change in retirement.

Required Minimum Distributions (RMDs)
The IRS mandates that retirees with tax-deferred retirement accounts, such as Traditional IRAs and 401(k)s, must start taking required minimum distributions (RMDs) by a certain age (73 for people born between 1951 and 1959 and 75 for those born in 1960 or later). Neglecting RMDs can result in hefty penalties, making it crucial for you to stay informed and plan accordingly.

Taxation of Social Security Benefits
Many retirees rely on Social Security as a significant income source. Understanding the tax implications of Social Security benefits is vital for effective tax planning. It’s important to learn how to calculate provisional income(your non-Social Security income plus 50% of your annual benefit), a key factor in determining the portion of Social Security subject to taxation. Armed with this knowledge, you can strategize to minimize your tax liabilities while maximizing your Social Security benefits.

Tax-Efficient Withdrawal Strategies
Retirees often have a mix of taxable and tax-advantaged accounts. Adopting tax-efficient withdrawal strategies can help you to optimize your retirement income. By strategically tapping into different account types based on their tax implications, you can potentially reduce your overall tax burden and make the most of your hard-earned savings.

As you proactively educate yourself on these topics, you empower yourself to make informed financial decisions, ultimately ensuring a more secure and enjoyable retirement journey. But of course, remember that we’re here to help. Maintain regular appointments with us, both now and after you retire, so that we can help you anticipate income taxes and other issues related to your financial future.

About the Author: Mark Roberts

In addition to managing clients’ money and giving investment and diversification advice, Mark offers something that “the other guys” don’t - a unique approach to Retirement Tax Strategies and distribution. Time and time again, Mark meets with new clients who tell him they have a great relationship with their financial advisor but have never been offered information on this kind of approach to securing their financial futures. Mark has taken this feedback to heart and works tirelessly to ensure that his strategies focus on taxes and distribution. Mark started selling insurance for a major insurance company right out of high school to help put himself through college. After graduating with a degree in finance, he dove into estate planning on the financial side to set himself apart from other financial advisors. However, as changes were made to estate tax laws over time, Mark shifted his focus to income tax strategies. Mark’s philosophy is “the blue prints are more important than the wall paper or carpet.” The wall paper and carpet represent products like investments and insurance policies, whereas the blue prints represent the strategies. Once strategies that truly fit the client’s needs are put in place, our focus can shift to providing you with the right products. According to Mark, “It doesn’t matter what carpet we use if the walls are not in the right place.” Our approach to money management is designed to generate the largest alpha (quality) with the lowest standard deviation and beta (risk). By doing this, we help provide clients with the highest return on the lowest risk. Generating income for our retirees is also very important. Because withdrawing money from your portfolio hurts the account rather than helping it, our goal is to design income strategies to harm the portfolio the least making the money last longer.

Three Crucial Tax Rules for Retirees

Three Crucial Tax Rules for Retirees

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About the Author: Mark Roberts