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How can I avoid falling into a higher tax bracket when I retire? |
How can I avoid falling into a higher tax bracket when I retire? On the strategy of tax savings in retirement, you can do a few things. Remember, your tax bracket is based upon the income you draw off of qualified accounts and earned income. Take the approach of drawing income from a portion of qualified, non qualified and tax free areas. By following this approach, you can control your tax rate. If you have not set up tax free areas to draw income, do so immediately! There are four or five tax free areas for you money to gain growth. Remember, tax rates are comparatively low compared to the 1940's to the 1970's so count your blessings! Source(s): I am a Financial Planner for a Fortune 500 Company. I excecute this approach with my clients on a regular basis. take out the minimum (adopt a kid ;) give to charity... If you are lucky enough to have enuff equity Invest in tax free muni or bonds by useing a ladder you can insure continual monthly income Any good investment adviser can help you structure this :-) you will because your income will be less m Make less money, or have more deductions. If you have significant investments, invest in tax-free instruments like tax-free bonds. When you reach 79-1/2, you'll have minimum required distributions if you have a traditional IRA or a 401K. Before that age, you don't have to withdraw anything unless you want to use the money. You'll only pay taxes on what you actually withdraw from these. If you have a Roth IRA, any withdrawals aren't taxed. |
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