Episode #5: Taxes In Retirement

Today’s Prep:

If you want to learn how to mitigate your tax burden in retirement, this is the podcast for you. Discover the impact taxes will have on your portfolio.

(Click the featured times below to jump forward in the episode)

Equipping Points:

[2:12] – Don’t Assume Your Taxes Will Be Lower In Retirement.

  • Many folks assume because they won’t be working that their tax burden will be lower in retirement. That’s not necessarily the case. When you retire, you lose certain deductions, and if you’re not careful, your retirement accounts could also be taxed.

[4:05] – Talking Strategy.  

  • If you’re still working, you need to plan ahead. Develop a tax strategy now that will lower your taxes in the future. As an example, if you have the opportunity to contribute to a Roth IRA or Roth 401(k), do it. It’s cheaper and easier to pay the tax up front on your investments than it is down the road.

[6:15] – David Shares A Story. 

  • David shares the story of a client who did a Roth conversion on his entire 401(k). His goal was to get into a tax-free bracket. Instead, he was on a collision course toward higher taxes. David explains how he was able to help this client out of the hole.

[8:06] – David Shares Another Story On Inherited IRAs.  

  • David had a client to inherit an IRA from her sister. Due to an exception to the 60-day rollover rule, she was due to pay a large tax bill on her IRA.

[9:35] – How Tax Strategies Make A Difference. 

  • David devised a Roth conversion strategy to help lower a client’s tax bill. Basically, they moved this client’s investments from an IRA to a Roth IRA. Remember, it’s easier to pay the taxes on your principal investments than it is any gains you incur. After all, your retirement accounts are only going to continue to grow.

Today’s Takeaway:


More From David:

The host: David Dickens

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