Retirement is always a fantastic financial milestone. Now, the goal is to grow that nest egg while keeping Uncle Sam from taking too big a slice. With some strategic moves, you can enjoy more of your wealth, protect it from unnecessary risk, and make a difference for your loved ones. Here’s how you can keep building wealth in retirement—tax efficiently and stress-free.
1. Optimize Your IRA Withdrawals
IRA withdrawals are a big part of retirement income, but they’re also taxable, which can bump you up a tax bracket when required minimum distributions (RMDs) kick in at age 73. Here’s how to stay ahead:
Roth Conversions: Converting part of your traditional IRA to a Roth IRA means paying taxes on the conversion now, but withdrawals down the line are tax-free. Spread conversions over a few years to manage your tax bill and maximize the tax-free growth.
Withdrawal Strategy: Start with taxable accounts, allowing your IRAs to keep compounding. This approach also reduces taxable income from IRA withdrawals, keeping more money growing for you.
2. Give and Receive with Qualified Charitable Distributions (QCDs)
If you’re charitably inclined, QCDs are a win-win! You can direct funds from your IRA to a charity, which counts toward your RMD but doesn’t count as taxable income. Not only does this keep your tax rate down, but it can also lower taxes on Social Security and Medicare premiums, helping you stay on track financially.
3. Go for Tax-Friendly Investments Outside of your IRA
When you want growth balanced against risk, consider these options as your friend:
Municipal Bonds: Muni bonds are tax-free at the federal level and sometimes at the state level, providing steady income with little risk.
Dividend Paying Stocks: Mutual funds and ETF’s that hold dividend-paying stocks can provide a buffer during market headwinds and they have tax advantages too, since qualified dividends are taxed at lower rates than regular income. ETFs are especially tax-smart since they tend to trigger fewer capital gains taxes.
4. Manage Capital Gains Like a Pro
If you’re drawing from taxable accounts, capital gains can add up quickly. Keep more of what you’ve earned by using tax-loss harvesting, which involves selling underperforming assets to offset gains elsewhere. This lets you manage taxes while rebalancing your portfolio to stay aligned with your goals.
Take Action for a Smoother, Smarter Retirement
Enjoying your wealth in retirement while staying tax-smart doesn’t have to be overwhelming. With a few well-timed strategies, you can protect your assets, enjoy your retirement, and still leave a lasting legacy. Looking to put these ideas into action? Let’s talk! I’d love to help you make the most of your hard-earned savings with a plan tailored to your goals. Reach out today to get started on securing your tax-efficient retirement. Call or email me at ymarsh@marshwealth.com to learn more.
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