How to Mitigate Taxes in Retirement

Joe and Al discuss a recent U.S. News article on 7 ways to mitigate your income tax in retirement. It’s all about making plans now to cut your tax liability when you’re no longer working. Also learn how to mitigate your tax on Social Security and see the value in converting to a Roth IRA.

1:45 “If you’re living on Social Security, there’s no raise for you next year”

4:16 “Do you know what will be your biggest lifetime expense? For most of you it’s not what you think—it’s taxes”

4:43 “According to a recent article in Forbes magazine, the average income earner will have a lifetime tax bill of $188,000 and adjusted for inflation that’s around $350,000”

5:36 “You have more control over the amount of money you pay in taxes in retirement more than any other time in your life”

10:07 “If you don’t spend a lot of money every month, you won’t have to withdraw so much from your retirement!”

13:25 “It’s more difficult to mitigate tax if you need to withdraw a large amount to pay the monthly mortgage”

19:45 “Your Social Security benefits could be tax-free, they could be taxed up to 50%, or they could be taxed up to 85%–it’s not an 85% tax rate but 85% of the benefit would be subject to ordinary income tax”

23:58 “Now, there’s such a lack of training and planning [in the financial advising industry] when it comes to distributing the wealth back to the client”

24:34 “Social Security strategies are key and huge when it comes to planning, so if you can mitigate your tax on Social Security then that money could go a long way”

26:34 “Taxes really don’t stop when your paycheck does; in fact tapping your retirement nest egg comes with all sorts of new rules”

26:56 “As you near retirement, tax planning becomes more important than ever—but you must use a forward-looking strategy”

31:57 “Bleed some [money] out each and every year by taking some money out of your IRA, your 401(k) and convert it to a Roth—yes, you’ll pay taxes on what you convert but guess what? You can convert as much or as little as you want to”

34:36 “We’re seeing all kinds of mistakes, and people don’t realize it until they hit 70 ½ because that’s when the required distribution kicks in and all of a sudden folks are in a much higher tax bracket”