How to Pay Lower Taxes in Retirement

When you think of yourself in the future, at the retirement age, how do you imagine yourself? If you’re like most people, then you probably see yourself sitting on a beach somewhere sipping a cool drink or maybe traveling the world. In any case, you probably do not like to imagine yourself paying through the nose for taxes.    

Sadly, though, paying a lot of taxes in retirement is a reality for many people. Fortunately, however,, if you plan properly and adequately for retirement, you can avoid having this become your reality.

Some tips for not getting drowned by taxes in retirement include:

l  Have diversity in your retirement accounts. Aim to have both tax-deferred accounts (think 401(k)s and IRAs), as well as after-tax savings accounts in order to receive maximum tax breaks where applicable and benefits in general.

l  Vary your itemized deductions each year or even every other year.

l  Vary your income regularly

Plan Ahead

In addition to following the useful tips listed above, be sure to do some ahead-of-time tax planning where you can. Ideally, this should include both long range tax planning and annual tax planning.

With long range tax planning, you can easily come up with a plan as to how much you can withdraw from various accounts over the years, as well as what you can expect from benefits.

Annual tax planning should be focused on just the upcoming year but will give you a chance to factor ever-changing tax rates, deductions, and other variable information into your long range planning for improved accuracy.

Get Help from a Pro

In addition to following the tips presented here, bear in mind that absolutely nothing compares to getting expert professional help from a financial adviser, planner, or other finance professional. These pros will know all the ins and outs of the industry and will be able to use their knowledge, coupled with your own and your own efforts, to help you pay as few taxes as possible in the “golden years” of your life.