Retirement and tax planning go hand in hand. When you retire your focus
changes. It's not anymore how much money you have, but rather how much
of your money you get to keep!
Tax laws do offer options to help you minimize your tax burden. Between you and your accountant or advisor, retirement tax planning can reduce your taxes.
There are several tax advantaged retirement plans available that permit you as an employee to have a portion of your salary deducted from your paycheck and contributed to a retirement account. Your employer may also make contributions to this account.
Tax on your, as well as your employer's, contributions plus the income earned on the account is deferred under defined governmental rules until your retirement or until you draw against this account.
The tax laws set a maximum amount you can contribute annually to your tax advantaged retirement plan. The smart thing to do is to contribute as much as you can within the limits allowed.
Several of these specific tax advantaged retirement plans are discussed on this Web site. Do study these plans for informed decisions in your retirement and tax planning.
Make sure that the plan allows you to decide how your money is invested inside your tax advantaged retirement plan. The smart thing is to diversify your investment spread and to remain cautious and conservative rather than aggressive.
Your tax advantaged retirement plan is only one component of your comprehensive retirement plan. Do consider a retirement income planner in your research and choose a retirement calculator by visiting these pages on our Web site.
However, you cannot rely on these tools entirely for your retirement planning decisions. You'll need a qualified advisor for that.
Your retirement tax planning should consider your changed dynamics when you are actually retired. Your income tax would probably be at a lower level because your income might be lower. But it pays to consider, and avoid if possible, many other forms of taxation.
Property taxes remain, and rise, even if your property has been fully paid. It might be prudent to downscale to reduce property taxes.
None of us like to think about death duties or deceased estate taxes, but if you did build up a large estate during your lifetime, your retirement and tax planning should also focus on this aspect.
Living trusts are typically the retirement tax planning instrument to apply. You're in uncharted waters here. Be prepared to spend money on alternate opinions. The issues are complex, but make sure you understand everything before you implement your structure.
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