Couple looking over tax documents in preparation for retirement

Taxes During Retirement

Planning for retirement requires a great deal of foresight, pragmatism, and an attention to detail. Whether you’re already working with one of our Dallas financial advisors or Fort Worth financial advisors or you’re just beginning to explore your retirement planning options, one thing you should always consider are taxes during retirement. Even the best laid plans can fall short if this expense is overlooked, so it’s imperative that you understand the way taxes can impact you upon retirement and how to best prepare for this expense so that you and your wealth are properly protected. In this article, our Dallas and Fort Worth financial advisors explain taxes during retirement and how to make the best choices now in order to secure a comfortable post-career future.

Understanding Your Tax Bracket for Retirement Planning

If you know your current tax bracket, then you’ll already understand the process for determining your tax bracket upon retirement, as the same rules apply. Your retirement tax bracket is determined by your filing status and taxable income after deductions. Even though you’ll no longer be earning a salary through your place of employment, you will still have taxable sources of income, such as those earned through Social Security, IRA and/or 401K accounts, and investments.

Pay Fewer Taxes Upon Retirement

Minimizing your taxes upon retirement is an important way to ensure you maintain the wealth you’ve built during your career. And the sooner you include these options into your retirement planning, the better prepared you’ll be. Discuss these strategies with our Dallas and Fort Worth retirement financial advisors sooner rather than later:

Invest in a Roth IRA or 401(k) IRA

One of the greatest benefits of Roth accounts is their tax incentives. The money you withdraw from a Roth IRA or Roth 401(k) is not taxed, as you paid taxes on this money upon deposit. Our Dallas and Fort Worth financial advisors recommend opening a Roth account for this very reason, especially if the rate is low upon investment.

Choose Tax-Free Investments

Bonds are an excellent way to protect your assets from taxation–either at the state, local, or federal level–which is why our independent financial advisors recommend they become a part of your investment portfolio before or upon retirement.

Avoid Premature Withdrawals

Some accounts, such as a traditional 401(k), come with significant and costly penalties. Ask our Dallas financial advisor or Fort Worth financial advisor about how to take strategic taxable distributions, the specifics of which depend on your age, the laws governing the type of account from which you plan to withdraw, and income at the time of withdrawal. 

Choose a Trustworthy Dallas Financial Advisor with a Proven Record of Success

You’ve worked hard to establish a diverse and dependable retirement investment portfolio over the course of your career, so it stands to reason that you want to do everything you can to maintain the wealth you’ve spent years building. Our Dallas financial advisors and our Fort Worth financial advisors have established a noteworthy reputation by finding ways to make your money work for you, not the other way around. We’re knowledgeable about the complicated and ever-changing investment market and will guide you to make the kind of decisions that yield results. Call us to schedule an appointment with one of our trusted Dallas financial planners and secure a comfortable and hassle-free retirement when the time comes.