As people near or transition into retirement, there can be a drastic change in terms of the sources of their income. Inevitably, that also leads to a new landscape of taxes that could be taken out of withdrawals from retirement accounts or from gains realized by cashing in on investments. 

Consider these strategies – some big and some small – when determining ways to approach taxes in your saving and/or retirement years:

When to Start Collecting Social Security

Depending on your financial situation, it’s possible that you won’t need the Social Security benefits you’re entitled to immediately upon reaching full retirement age. If you fit into this box, you can consider delaying your receipt of benefits until age 70. This strategy will allow you to earn credits for additional benefits once you begin collecting while avoiding taxes in the present.

Help Avoid Unnecessary Penalties

If you have retirement funds saved in a 401(k) account, withdrawing money from it too soon will come with a considerable price tag. In addition to normal taxes owed on withdrawals from a 401(k), funds taken out of these accounts before the age of 59 ½ will be subject to an additional 10% early withdrawal penalty. If you are in search of increasing sources of income and aren’t yet at that age, consulting a financial advisor can help you be sure that you’re being savvy with all your saving and planning options.

Where Will the Wind Take You?

Does your retirement plan include moving to that mountain cabin or seaside bungalow you’ve always dreamed of? Real estate agents will remind you that location is key and that’s no different when considering how it can affect your taxable income in retirement. If you move to a new state, withdrawals and distributions will be subject to the tax laws of your new location, regardless of where you lived and worked to build up those accounts. A few miles and an invisible state line could make a huge difference in what your future tax bill could be.

Always Have a Plan

Even if you’re feeling confident about your tax situation this time around, economic conditions and trends are continually changing and staying on top of information relevant to you and your financial future is much easier when you are always monitoring to avoid any surprises next tax season. Reach out to our seasoned professionals at 678-539-9518 and let us know how we can help.

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Insurance products are offered through the insurance business Consha Financial. Consha Financial is also an Investment Advisory practice that offers products and services through Impact Partnership Wealth, LLC (IPW), a Registered Investment Adviser. IPW does not offer insurance products. The insurance products offered by Consha Financial are not subject to Investment Advisor requirements. 

This blog is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.