How Tax Planning Changes Through Four Stages of Retirement

People often pay more in taxes than expected because a confusing system treats various income types differently and contains hidden taxes and penalties.

RETIREMENT SURPRISES

Inflation

People view their future costs in current dollars and don’t anticipate how those costs will grow with inflation.

Longevity

People may end up living longer than they expect, which requires more money.

Expenses: People underestimate how much they need to maintain their pre-retirement standard of living.

Health Care

People don’t realize how much of their savings will be spent on health costs.

KEY #1 You must know what your after-tax retirement savings picture looks like BEFORE retiring.

KEY #2 Social Security and Medicare have “tax traps” and you need to plan for them, too.

KEY #3 You must plan how and when you will use taxable, tax-deferred, and tax-free assets to manage your income and tax brackets efficiently.

KEY #4 Organize your assets for your family’s benefit—estate planning still matters!

SOLUTION

Because your tax exposure will change throughout retirement, you need a tax strategy that:

• Anticipates how and when you tap assets to cover your personal expenses.

• Understands the range of taxes you will face at various stages.

• Manages your actions so you pay as a low a tax rate as possible.

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