Retirement Tax Management: The Opportunity to Manage Tax Brackets

Wait, did you think that tax management would become easier in retirement? That’s hilarious! Managing your taxes in retirement can be a scary endeavor. There are new terms popping up at you from every direction. That’s why we’re taking this whole month to discuss retirement tax management. With a little bit of education, you won’t find tax management in retirement that daunting. Start your education in retirement tax management by listening to this episode of Retirement Answer Man. 

Should we all jump on Michael Kitces’ rising equity glide path?

Last month we presented Michael Kitces’ argument for the rising equity glide path. This academic theory of investing goes against everything that seems natural to an investor. The idea is that the investor should get more aggressive as they get older since that is when the sequence of return risk is the greatest and they have the longest amount of time ahead of them. A listener was wondering why we would air this on the show if we weren’t advocating that our listeners go out and try this with their own investments. Remember, I am here to present research to help you all stay informed and so that you can understand and identify risks. I am not advocating that you do anything. I don’t know you and cannot give you advice on this show. 

Don’t miss this opportunity to save money!

Retirement tax management is one of the most missed opportunities in retirement. It is commonly missed because it is so confusing to advisors. In addition, financial advisors can’t give tax advice, we can only be tax-aware. Most CPAs aren’t as familiar with all of the tax opportunities in retirement either. They are so used to recommending deferring taxes for as long as possible. And while that’s a great plan for the accumulation stage of retirement planning, once you retire you need to come up with a new tax strategy. Do you have a tax strategy that you plan to use in retirement? How is it different from your tax strategy in your working years? 

Why is multi-year tax planning important in retirement?

In retirement, it’s time to stop thinking of your taxes one year at a time. Multi-year retirement tax planning will save you money in the long run. Small things can add up to make a big difference over the long-term. One of the coolest things about retirement is your flexibility in realizing income. There are also actions you can take now to help your future self out from a tax perspective. Do you have a plan to manage your assets in retirement? Have you thought about tax planning in retirement?

Retirement tax management starts with knowing the different tax brackets

It’s important to become familiar with the different tax brackets. Retirement is probably the only time in your life where you can actively manage your income. Retirement income is usually a combination of after-tax assets, pretax assets, tax-free assets, and income. These are the raw resources you can use to create a retirement income. Once you know the different tax brackets you can understand where you want to fall and how much wiggle room you have to continue to stay in the tax bracket that you want to be in. Find out what other tools you have to manage your taxes in retirement by listening to this episode of Retirement Answer Man.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

HOT TOPIC SEGMENT

• [2:56] A listener had a question about the rising equity glide path

PRACTICAL PLANNING SEGMENT

• [10:25] Retirement tax management is one of the most missed opportunities in retirement.
• [12:34] What materials do you have to manage your taxes in retirement?
• [14:00] What are the tax brackets?
• [17:35] What opportunities can you take to manage taxes in retirement?

THE HAPPY LAB SEGMENT

• [19:48] It’s easy to assume the worst, but try not to

TODAY’S SMART SPRINT SEGMENT

• [22:03] Focus on not predetermining the outcome of things. Just let it flow

Resources Mentioned In This Episode

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center