Lower Your Retirement Taxes.
One of the Grimm News subscribers, Evan, sent me an article from Kiplinger, a leading publisher of business and personal finance advice, about 3 creative ways to lower your taxes in retirement by using some minimalism tactics.
A lot of time taxes can be one of the unexpected things waiting for you after you retire. Tax deferred retirement accounts, reduced tax dedications and even Social Security being subject to income tax can create what I like to call the “Tax Pickle.”
Strategy number one is downsizing to lower the ongoing burden of property tax. Yup, in most cases property taxes continue even after your home is paid for. This is often a forgotten cost to account for. This could also help reduce maintenance and stuff we gather as we go.
Avoiding state sales and income tax can be a boost. If you live in a state with both, a move to a state without one or the other could save you 5, 10, 15% depending on your situation and where you end up. A lot of retirees end up on fixed budgets and limited income so a few extra dollars could really add up.
Last, how you’re invested in your senior years can reduce your tax liability. Tax free municipal (muni) bonds could keep your money growing and avoid additional taxes. Investing in “tax-free” accounts can also be a saving grace if a larger sum of money is needed for an unexpected cost. Having to withdraw large sums from taxable accounts only means larger tax bills on all your income.
Tax planning may be one of the most important things your financial professional should be doing if you are planning for the traditional approach to retirement.
Here is a link the the Kiplinger article.
https://www.kiplinger.com/taxes/creative-ways-to-lower-your-retirement-taxes
If you want to learn more about taxes in your retirement I recommend The Tax Bomb in Your Retirement by Josh Scandlen.
As always, if you come across a financially related article you’d like to send my way please do!
Best place to send them is to me.
More next time!
Jonathan