Remember, it’s not only what you make but what you keep!
Tax-deferred investments, such as traditional IRAs and 401(k)s, can be an effective way to save for retirement while minimizing your tax bill. These investments allow you to defer paying taxes on your contributions and earnings until you withdraw them in retirement. However, keep in mind that once you reach age 73, you will be required to take required minimum distributions (RMDs) from these accounts, which will be subject to income tax.
Required minimum distributions (RMDs) are the minimum amount you must withdraw from your tax-deferred retirement accounts each year once you reach age 73. The amount of your RMD is based on the balance of your account and your life expectancy. It’s important to plan for RMDs so you don’t get hit with unexpected taxes and penalties.
There are a variety of tax credits and tax breaks available to retirees, including the earned income tax credit, the saver’s credit, and the retirement savings contributions credit. Additionally, some states offer property tax breaks or exemptions for seniors.
As a retiree, you may need to file taxes each year, even if you don’t have earned income. You may also need to pay estimated taxes throughout the year if you have significant investment income. It’s important to keep track of all your taxable incomes, including Social Security and pension income, and to stay up to date on changes to the tax code that may affect your tax strategy.
At Goldstone Financial Group, we understand planning for your retirement taxes is a vital part of ensuring you have enough income to support your lifestyle in retirement. By understanding your tax bill, maximizing tax deductions, and taking advantage of tax-deferred investments, you can minimize your tax bill and maximize your income. Remember to plan for required minimum distributions (RMDs) and consider using qualified charitable distributions (QCDs) to give to charity in a tax-efficient way. With careful planning and attention to detail, you can make the most of your retirement years.