When turning your investments into retirement income, it’s important to consider the impact of taxes. Once required minimum distributions (RMDs) begin, you’ll generally have to withdraw money from your pre-tax accounts and pay taxes on those distributions. But by intentionally drawing from those accounts earlier, you may be able to reduce your future tax burden.

In this week’s Money Wisdom Question Series, Heath Grossman, CFP® explores a few ways to make strategic, tax-efficient withdrawals in retirement.

Create Tax Diversification

Diversification matters for taxes as much as it does for investments. Having assets spread across taxable, tax-deferred, and tax-free accounts can provide greater flexibility in retirement. When you have control over the tax treatment of your money, you can be more strategic about when and where you withdraw funds.

Stagger Your Withdrawals

Withdrawing funds in a strategic sequence may help manage your tax bracket and reduce your taxable income over time. That can leave you with more after-tax income to use toward the things that matter most in retirement. You may also potentially have more to leave behind for your children and grandchildren.

Intentionally Time Your Social Security

Delaying Social Security benefits beyond full retirement age may help keep your taxable income lower in the earlier years of retirement. Of course, you should base your Social Security claiming decision on your overall retirement income plan, not taxes alone.

Perform Roth Conversions

Converting money from traditional pre-tax accounts to a Roth IRA can help reduce your pre-tax balance. Roth conversions can also create a source of potentially tax-free income for later years. This strategy isn’t right for everyone, but for some, it can be a powerful part of a broader tax-planning strategy.