Tax Planning

In accumulating wealth for a source of income during retirement, many consumers don’t consider the impact of taxes. Underestimating your tax burden can lead to unnecessarily losing significant portions of your precious retirement income. Although taxes are unavoidable, there are strategies, rules, and processes that allow you to keep more of your accumulated resources.

 

Seek Out Tax-Advantaged Products

Many financial products, such as fixed interest annuities and cash value life insurance, provide tax-deferred growth. These types of financial products provide opportunities for greater growth, as the accumulated value within these accounts is generally not taxed until distribution. Contrast this with some investment products such as stocks where gains can be taxed every year.

 

Structure and Sequence the Pieces of Retirement Portfolio

You may have multiple retirement accounts in your portfolio, including things like annuities, life insurance, 401(k)s, IRAs, and so forth. Not only is it important to consider when to trigger these accounts for your retirement needs, it is also important to structure and sequence your accounts as you pivot into retirement. This tax minimization strategy can be somewhat complicated, so it’s best to seek out a trusted financial advisor—like those at Lifetime Assurance—who can design a retirement plan that helps you maximize growth and lessen the impact of taxes.