Reducing Taxes When You Retire

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

How to Reduce Taxes in Retirement

Utilize Tax-Advantaged Retirement Accounts

Harvest Tax Losses

  • Example: Sell investments at a loss to offset capital gains.

Understand Social Security Taxation

Optimize Withdrawal Strategy

  • Example: Strategically withdraw from taxable, tax-deferred, and tax-exempt accounts.

Use Standard or Itemized Deductions Wisely

  • Example: Itemize deductions if they exceed the standard deduction amount.

Consider Relocating to a Tax-Friendly State

Gift Money to Family or Charities

  • Example: Use annual gift tax exclusion or charitable contributions for tax benefits.

Convert Traditional IRA to Roth IRA

  • Example: Convert during low-income years for lower tax rates on conversion.

Retirement Income Plans and Taxes

Taxable Retirement Income

Income TypeHow Is It Taxed?
InvestmentsCapital gains or ordinary income tax
Social Security Income (A Portion)Ordinary income tax

Tax-Deferred Retirement Income

The taxable portion of all these retirement vehicles is treated as ordinary income, subject to ordinary income tax rates.

Income TypeHow Is It Taxed?
PensionsOrdinary income tax
Qualified Retirement Plans (Except Roth)Ordinary income tax
AnnuitiesOrdinary income tax

Tax-Free Retirement Income

Income generated from these retirement vehicles is generally tax-free, thus reducing the effective overall tax rate and allowing more after-tax spending.

Income TypeHow Is It Taxed?
Roth Retirement PlansNot taxed
Life Insurance Cash ValueNot taxed
Roth AnnuitiesNot taxed
Municipal BondsNot taxed
Social Security (A Portion)Not taxed
How To Reduce Taxes In Retirement

Next Steps

Have you considered using life insurance cash value or a Roth IRA annuity to provide tax-free income in retirement? If not, now may be the time to look into these options. Each has benefits that can make them appealing depending on your unique financial situation. Please request a quote today to find out more and see if one of these products is right for you. We would be happy to help you explore your options and find the best way to secure your future retirement income.

The Annuity Expert can help you understand how various insurance products can help you achieve a tax allocation strategy and how different retirement savings vehicles can work together to benefit your income needs in retirement.

How Can Retirees Reduce Taxable Income

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Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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