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Smart Tax Planning for Seniors

Smart Tax Planning for Seniors

January 29, 2024

When it comes to tax planning for retirement, there’s no secret formula. Age, income levels, timing, and other factors contribute to the need for a custom plan. A good rule of thumb is to preserve investments not being taxed for as long as you possibly can. That way, you can benefit from low capital gains while investments in your retirement accounts may continue to grow.

A quick retirement timeline:

  • During the first year, most retirees begin to pull from liquid assets. This may be in the form of traditional savings accounts, mutual funds, or short-term bonds. Other investments may be kept in hopes of continued growth. 
  • As you spend, you’ll need to determine the amount you want to withdraw from your long-term assets, such as a 401(k) plan or IRA account. Leave the riskiest assets for later.
  • When the time comes, determine a sequence and time for withdrawals from longer-term assets like taxable investment accounts. 

Many retirees look for a balanced withdrawal strategy and seek access to one year’s worth of liquid income. Other considerations—including gifting strategies, special deductions, and even losses—can shift tax responsibility. It might be time to review your retirement plan and if needed, work with a tax professional for further guidance.

Call today to discuss your retirement planning.

This communication is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.