Retirement Tax Management: Why It’s Important

Tax planning in retirement isn’t the same as in your working years. This is why we are dedicating an entire series to helping you understand how to manage your taxes in retirement. To help me navigate this complicated topic, I’ve invited retirement tax expert Andy Panko to join me for the whole month-long program. Over the course of this series,
you’ll learn why tax planning is important in retirement, which tax land mines to look out for, what tools to include in your tax toolbox, and how to integrate tax planning into your retirement plan. Are you ready to dive deep into retirement tax planning? Press play now to learn why tax planning in retirement is so important.

How does tax planning change in retirement?

In your working years, tax planning isn’t that complicated. Since your income is based on your wages, you don’t have much control over your tax bracket. However, in retirement, you can control your tax bracket from year to year.

Chances are, you have been contributing to tax-deferred accounts like 401K, 403B, or IRAs for much of your life. These have been wonderful vehicles for retirement savings that has allowed you to defer a bit of your taxable income. Now that you are coming to retirement age, it is time to pay the tax man. These retirement distributions will be taxed, but when you decide to take them is up to you--up to a certain point.

Use long-term tax planning to save money in retirement

In retirement, there are multiple tax planning opportunities that you can take if you plan for the long term. Since you have more control over your sources of income, you have a tax advantage that you didn’t have in your working years. This can make planning complicated and challenging; however, with a bit of research and practice you could end up saving thousands of dollars over the course of your retirement.

Taxes aren’t the only thing to consider in retirement

Don’t let the tax tail wag the dog. Even though it is important to consider your taxes in retirement it is also important to remember that taxes are not the end all be all of retirement planning. What Andy and I are trying to do is to help you build a framework so that you can consider your tax planning in an organized way. When you come up with a strategy to guide your decisions it will help make the complicated world of tax planning a bit easier to digest. 

Check out this episode on YouTube

Did you know that we are now recording the Retirement Answer Man as a biweekly show? Make sure to check back in on Friday mornings to hear the Q&A part of the show. You can also watch this episode in a video format on YouTube so that you can see the charts and tables that we share. When you are done listening head on over to RogerWhitney.com and scroll down to the bottom of the homepage to sign up for the 6-Shot Saturday newsletter so that you can receive the worksheets mentioned in this episode

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

• [2:33] What are the changes in taxes in retirement?
• [7:00] Think long-term when tax planning in retirement
• [11:36] Taxes are important but not the end all be all
• [17:17] Trying to understand the tax system

TODAY’S SMART SPRINT SEGMENT

• [28:26] Pull out your tax return to find your AGI

Resources Mentioned In This Episode

Tenon Financial 

Andy’s Taxes in Retirement Facebook Group

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center