Tax Strategies for Retirement
As we plan for retirement, one crucial aspect often overlooked is tax management. While many focus on maximizing their portfolio’s rate of return, understanding and optimizing taxes can significantly impact your financial health in retirement. Joel Johnson, CFP® shares his insights on Retire Wiser with NBC CT.
Understanding Taxable Income
First, let’s explore taxable income. This includes earnings from CDs, bonds, and money market funds, categorized as ordinary income. These earnings are taxed at the highest bracket, so it’s essential to identify which of your assets fall into this category and manage them accordingly.
The Importance of Tax-Deferred Accounts
Next, consider tax-deferred accounts like 401(k)s and IRAs. These accounts allow your money to grow without immediate tax implications. The challenge lies in determining the optimal timing and order for withdrawals. While some may delay accessing these funds, it might be wiser to strategically withdraw earlier to optimize tax efficiency.
Leveraging Tax-Free Assets
Finally, tax-free assets, such as stocks held long-term or Roth IRAs, offer significant advantages. These can be transferred to heirs without tax burdens, making them an efficient estate planning tool. Understanding how to shift more funds into Roth IRAs can enhance your financial legacy.
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
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