3 Ways to Make Taxes Easier in Retirement: Taxes & Retirement Explained

Apr 4, 2023

Do you ever worry that you’re not optimizing your taxes in retirement? That can change! Working with a financial expert is a great way to make sure you’re handling your taxes the right way, meaning fewer headaches and more freedom. 

Credent’s Advanced Planning team has a lot of experience navigating unique, complex tax situations. Whether you’re in retirement, about to be in retirement, or still in the throes of your career, here are 3 of the top tips for how to make your taxes easier in retirement.

1. Consider a Roth Conversion

Converting your traditional IRA to a Roth IRA can help reduce your taxes in retirement. This will allow you to pay taxes on the funds now rather than in retirement, when your income may be higher. An advisory team can help you decide if this conversion makes sense for you and how to time it correctly. If you do want to hold on to your traditional IRA, that’s okay too! The money you add to that account may be deductible.

2. Consider Tax-Free Income Sources

You might not always have to pay taxes on the money you make. How? Investing in tax-free municipal bonds is one way to generate income without having to pay taxes. This can help you reduce your overall tax burden in retirement. Other tax-free resources can help too. Use an HSA account, for example, to forgo taxes on the money you use for health-related costs.

3. Maximize Your Deductions

Take advantage of deductions such as medical expenses and charitable contributions, which can help you reduce your taxable income in retirement. Other potential deductions include student loan interest, state and local taxes, mortgage interest, and credits for child and dependent care expenses and education expenses.

The biggest tip to make your taxes easier in retirement? Lean on an expert. In partnership with your tax advisor, Credent’s planning and investment process is focused not only on reaching your goals but also on minimizing the amount you have to pay. Are you giving money to the government that could be used for a trip, a gift, a new hobby, or an exciting purchase?

If you’d like to learn more about how Credent can boost your tax efficiencies in retirement, schedule a complimentary consultation with a Wealth Manager or reach out at [email protected]

Investment advice offered through CX Institutional, a registered investment advisor.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

Schedule an appointment with an advisor in your area.