Tax Planning in Retirement

Tax Planning in Retirement

Last Updated on April 17, 2024 by Ben

Throughout my work life, I’ve always thought that saving for retirement was enough and that I’ll be able to rest easy after. It turns out that isn’t even remotely close to reality.
Taxes, I soon learned, can erode my savings unless I make suitable investment and financial choices. Once regular income stops, tax deductions will undoubtedly be a burden. It was immediately apparent that I needed to conduct careful tax planning in retirement to secure my future.

To accomplish this, understanding tax calculations and learning strategies to reduce tax liability is a must. Continue reading to learn everything about tax planning in retirement!

Best Companies for Tax Planning In Retirement

Here are the top companies to consider when planning for taxes in retirement.

Augusta Precious Metals: Editor’s Choice – Great Buyback Program (4.9/5)

Star Rating

Thinking of investing in precious metal assets for retirement funds? Augusta Precious Metals will be an excellent choice for newbies and veteran investors in the market.

Augusta Precious Metals is a well-known IRA company with a stellar reputation for keeping its customers satisfied and their investments safe. They offer a robust means of diversifying one’s wealth — such as converting cash savings to physical assets, much like gold.

Augusta offers its customers a stable way to save for retirement by helping them invest in precious metals. Their primary offering includes physical gold and silver IRA, which allows investors with $50,000 to invest in gold and silver as part of their tax-advantaged accounts. In doing so, they can diversify their portfolio and protect it from inflation or market volatility.

By opening an IRA account with Augusta, an investor can protect their retirement and family’s financial stability and security. These accounts allow them to set aside their tax-protected savings for better use in the future.

Additionally, Augusta goes out of its way to ensure that every customer is satisfied. They guide new investors through the entire process and procedure of setting up the account and funding an IRA.

They also offer a one-on-one webinar to answer all inquiries and questions regarding their services. Moreover, they have an extensive library of educational resources that their customers can utilize in their free time!


  • Extensive educational resources to help investors make the right financial decision.
  • Transparency on prices
  • Personalized services for each customer
  • Lifetime support


  • A minimum initial investment of $50,000
  • Like other investments, there is no guarantee that it will bring profit

American Hartford Gold: Runner up – Best Price for Bullion (4.8/5)

Star Rating

Apparently, in current times, Social Security benefits wouldn’t be enough to support a retiree, let alone their family. Investing in a nest egg that one can rely on would be beneficial. Saving in a bank account wouldn’t cut it for someone with big retirement dreams and plans.

American Hartford Gold understands the importance of saving money and funds for retirement. They also know that using precious metals IRAs can expand someone’s tax-deferred savings.

American Hartford Gold is a company based in Los Angeles, California, that helps people interested in investing in precious metals. The company distributes products and items physically or places them on retirement accounts like 401(k) or IRA.

This precious metals company aids its customers in growing and protecting their retirement accounts. With the company’s help, investors can open and set up accounts that can offer them multiple benefits, including tax-free or tax-deferred growth on earnings!
The company focuses on helping clients build a diversified investment portfolio of precious metals like gold, silver, and other valuable metals. They also pride themselves in offering several promotions for its customers.

They offer free silver for anyone who signs up to their official website, regardless of whether they open an account with them or not. They also offer free safe and storage for precious metals.


  • An impressive amount of good ratings and reviews
  • Several promotions, from waived fees to free safe
  • Buyback and price match guarantee
  • Great selection of bullion and coins


  • Prices on their services and products are not available on their website
  • Does not ship internationally

Goldco: Best and Most Trusted Gold IRA Company Overall (4.6/5)

Star Rating

Goldco knows that retirement savings are a crucial point of consideration for everyone. It is something that every adult should consider starting early on. Goldco wants to help new and old investors start and grow their retirement savings.

With 16 years of experience under its metaphorical belt, Goldco is undeniably a seasoned company that most can consider a top-tier or big-name in the market. Those several years cultivated its services and made it into something investors can trust regarding retirement account protection.

It earned spectacular ratings from the Better Business Bureau (BBB) and Business Consumer Alliance, a tell-tale sign of its quality and services. Goldco promises its customers a guarantee that all retirement savings under its name will grow, prosper, and be protected.
The precious metals IRA under Goldco offers an interactive investing opportunity and a chance for those who need to save for their retirement days. The excellent news is that these precious metals offer diversity, which hedges its customers against inflation and tax-advantaged accounts!

Moreover, Goldco offers well-trained agents to every client, providing them with guidance and advice to help them make necessary financial decisions. They can also give tips on avoiding unnecessary taxes and penalties due to loopholes!


  • BBB A+ rating
  • Endorsements from famous public figures and reputable media personalities
  • Overwhelmingly positive reviews and feedback from customers
  • Full transparency of company history


  • Huge minimum investment of $50,000
  • Goldco is not forthright with their charges

Birch Gold Corporation: Great Staff Overall (4.5/5)

Star Rating

Birch Gold is a renowned company that offers precious metals IRA and sales with a particular emphasis on customer education and all-in-one service. Since there is evident uncertainty in the market today, Birch Gold wanted to offer a chance to investors to diversify their portfolios to protect their assets and wealth better.

With almost 20 years of experience, Birch Gold continues to provide quality service to all its customers. It committed itself to deliver excellent customer service and education. They have served more than 13,000 clients, offered them personalized options, and helped them enjoy their tax advantages.

Birch Gold offers a complete and wide range of precious physical metals, namely gold, silver, palladium, and platinum. Furthermore, they provide these metals in various weight categories.

The company aspires to make every customer’s life much easier by devoting an entire section of itself, an in-house IRA department, to help with the process. Their team also includes a wide variety of experience and specialties — with room for financial advisers, wealth managers, commodities brokers, and more!

If Birch Gold sounds familiar, it’s likely due to several media mentions. They are also endorsed proudly and loudly by the Ben Shapiro Show, which gave the company more attention. These endorsements help build the company’s credibility.


  • Holds exceptional standing with investment professionals and companies
  • Birch Gold offers several educational resources for clients
  • Customer service earned top marks
  • High profile endorser


  • The company has hidden fees
  • No overseas or international depository options

Understand The Calculation Of Retirement Taxes

Most people have this misconception that retirement means tax-free. That is, unfortunately, far from the truth. As long as a person receives income sources, they will be taxed no matter what.

Even without a regular income or salary coming in, an individual can still earn capital gains, property rents, and interests from the investments they made in the past. All these are taxable income sources. The tax amount would depend entirely on the annual income and age of the individual.

Different tax rules tend to apply to each type of income source a person receives. Here is how the common types of retirement income sources are taxed:

Social Security Income

A retiree might not be required to pay taxes if their Social Security benefits are their only income source. It is because their income is too low to be deemed taxable. Note that a portion of their benefits will likely be taxed if they have any income source other than their Social Security benefits.

More than 50% of Social Security beneficiaries pay taxes. The percentage of families paying income taxes from their Social Security benefits was less than 10% back in 1984 – which jumped to more than 50% by 2015.

Retirees with high monthly pensions might need to reimburse taxes on 85% of their Social Security benefits, with a total tax rate running as high as 37%. Retirees with no other income can receive their benefits tax-free and not pay income taxes in retirement.

The taxable amount (from 0 to 85%) will depend on their income and the Social Security benefits. The IRS calls the other income source the ‘combined income’. To determine how much benefits will be taxed annually, just plug the figure into a formula on the IRS tax worksheet.

Pension Income

Most pension incomes are taxable. It will undoubtedly be taxed if a person withdraws the pre-tax money they contributed to a plan. Most pension plans are funded with pre-tax income, so people should expect the entire annual pension income to be included on their tax return as taxable income each year they take it.

IRA and 401 (k) Withdrawals

A retiree will need to pay income tax on their pension and withdrawals from tax-deferred investments, like traditional IRAs, 403(b)s, 401(k)s, and other similar retirement plans. These are long-term assets, but withdrawals are not taxed as long-term capital gains.

The amount of tax will depend on the total amount of their income and deductions, as well as what tax bracket they are in. It is possible not to pay taxes if the retiree has a year with more deductions than income — such as a year with plenty of medical expenses.

Investment Income

A retiree with investment income will pay taxes on dividends, capital gains, or interest income, just as they did before they retired. These investment income types are reported on a 1099 tax form every year, which is sent to the retiree directly from their financial institution.

Each sale generates long or short capital loss or gains if they systematically sell investments to acquire retirement income, and this will be reported on their tax return. They will not pay taxes or a portion of their capital gains for a year that their other income sources are low. They might qualify for a 0% long-term capital gain rate.

Pay-Off Debts Before You Retire

Carrying debts into retirement is a less-than-ideal situation. The answer is obvious. The higher the debt during retirement, the less a retiree can spend on other things.

High-interest debts such as credit card dues, car loans, and personal loans do not offer any tax benefit. Not settling these debts before retirement can undoubtedly lead to financial instability and insecurity later on.

Debts will affect a person’s retirement savings if left to sit long enough. Settling them early on means a retiree can spend their entire income on living costs and enjoy their preferred lifestyle.

To help manage debts before retirement, here are some valuable tips to follow:

1. Stop digging the debt hole deeper

To not have debts after retirement, the person must stop racking up debt in the first place, especially when they are close to retiring. Many people think that retiring means their expenses will go down, which isn’t true. It tends to increase as most retirees want to do things that cost money, like traveling or buying their dream house.

2. Don’t attempt to fix mistakes with more and bigger mistakes

Some people about to retire end up realizing they didn’t save enough. That leads them to panic and make rash decisions to make up for it. Some would invest in businesses without thinking about it or take up loans for more funds.

3. Review the budget and boost savings

Including a ‘paying off debt’ and ‘retirement funds’ section in a budget plan is wise. That helps keep track of each month’s contribution, no matter how minimal. A person can review bills, plus credit card and bank statements, to establish a baseline and readjust the budget based on their spending and saving goals.

4. Save in an emergency fund to prevent unexpected debt

Unexpected expenses are the primary enemy when it comes to saving and paying off debt. They throw people out of their regular loop as they are forced to adjust everything to cover it. Many people set up emergency funds and savings to avoid getting caught off-guard.

5. Set debt-reduction goals

A person’s decision can be influenced by how much debt they have. It would be helpful to prioritize debt repayment. Though that is the case, it doesn’t mean that saving for retirement should be put on hold.

6. Settle the expensive debt first

It helps to make a list of all debt obligations and their interest rates. It allows the person to compare their significance and value. Debt with higher interest should be a priority.

7. Talk to a financial advisor or professional

For those having trouble settling debts or managing funds, it would be helpful to talk to a financial advisor. They can help people make financial decisions and options.

Plan Your Expenses

Upon retiring, the majority of big-ticket expenses have likely gone away. At this time and age, retirees probably have already paid their children’s college fees or secured property. Budget planning is still necessary, with the threat of taxes looming on their heads.

For most retirees, it is time to revise their day-to-day costs and expenses. It’s probably time to keep close track of their monthly fees and limit their spending abilities.

To create a retirement expenses plan, it is vital for retirees to:

    • Start with an estimated income or amount they will need
    • List their expected costs and spending
    • Consider the expenses that will change upon retirement
    • Factor in significant lifestyle changes
    • Calculate the retirement income
    • Set up a budget or spending plan to keep track of the funds
    • Try out the budget for the first few months and make the necessary adjustments along the way

Choose The Right Investment Options

Choosing the right investment tools and options is necessary to benefit from the deductions specified in tax laws fully. There are investment products that offer tax-free maturity amounts.

For someone interested in investments, here are the viable options to consider:

  • Stocks
  • Bonds
  • Mutual Funds
  • Property
  • Money Market Funds
  • Retirement Plans
  • Bank Products
  • Digital Assets
  • Annuities
  • Exchange-Traded Funds and Products
  • Futures and Commodities

Properly educating the self on all these investment options is the right step toward making the right financial decision. People should dive deep into investment options to know which ones would fit them, and their lifestyle, income, and livelihood, best.

Reassess Your Investments

Reassessing and rethinking investments is typical for those near retirement age. During this time, they start to read about investments and what they mean post-retirement. Most tend to change their investment holdings before or during retirement to save on taxes and preserve the principal.

Here are a couple of ways to go about it:

Municipal Bonds

Municipal bonds mean pursuing income exempt from state and federal taxes with a diversified and varied portfolio of municipal securities. These bonds are mutual funds that invest in debt securities issued by cities, states, municipalities, and other government organizations to fund capital expenditures and infrastructure construction, repairs, and improvements.

They are attractive to investors as they pay a stream of income free from federal taxes and may also be exempt from state taxes.

Dividend Stocks

A dividend is paid-per-share of stocks. For instance, if a person owns 30 shares in a corporation that pays $2 in annual cash dividends, they receive $60 annually.

If a retiree gains qualified dividends (regular dividends from a publicly-traded U.S and certain foreign corporations), they are taxed at more favorable rates than ordinary or regular income. The tax rate may be zero, 15%, or 20% – depending on the taxable income.

Losses That Offset Capital Gains

A retiree may use the losses on selling securities and other property to offset their capital gains. That way, they are not required to pay taxes on the gains. Additionally, they can use up almost $3,000 to offset their ordinary income (like bank interest) if they have excess capital losses.

Why Tax Diversification Matters

A planned approach for tax planning in retirement can help save money from taxes. Tax diversification is a strategy or technique that considers several tax treatments across the investment accounts a person will eventually use after retirement. Paired with tax-efficient withdrawal strategies, tax diversification can help a retiree make their assets last longer.

Diversifying a portfolio by allocating investments across several asset classes is necessary. That mix-up is mainly determined by an investor’s risk tolerance and objectives. Though, it is also crucial to diversify the tax status of their assets, which might increase their after-tax returns.

For instance, someone investing in Roth accounts can allow them to pay taxes on income when they are in the lower tax bracket, especially if they are young and have yet to reach their peak earnings, rather than in retirement. Then, later on in life, assets in the “tax never” bucket allow them to draw their assets strategically to stay in the lower tax rate.

Additionally, by considering tax diversification, a person can:

  • Gain flexibility in how they access their retirement funds
  • Potentially save more over time and help their assets last longer
  • Take the front wheel of their financial picture and situation, now and in retirement

4 Effective Strategies to Reduce Your Tax Liability

Using prudent retirement tax strategies can help make a person’s assets last longer when they’re out of the workforce. Here are promising approaches to tax planning in retirement:

1. Use “tax later” accounts for retirement funds

It makes sense to use mutual funds and fully taxable stocks for short-term needs. For retirement funds, a person would want to max out tax-advantaged accounts like IRAs and 401(k)s instead of relying on “tax now” assets.

2. Take advantage of Roth accounts

Roth IRAs and Roth 401(k)s benefit younger investors or those who believe they belong to the higher tax bracket. Using a mix of Roth and traditional accounts is recommended for someone who’s not entirely sure where they fall on the tax bracket in retirement.

Some employers allow their employees to split the retirement allocation. If that’s not the case, they can always invest in a 401(k) for work and a Roth IRA on the sidelines. Just take note that the Roth 401(k)contributions are “tax never,” but the employer’s matching contributions are all “tax later.”

3. Consider permanent life insurance

A person can utilize permanent life insurance cash value for retirement and other needs, such as college funds for a loved one. The withdrawn money is usually tax-free, which allows a person to remain in the lower tax bracket during retirement.

4. Invest tax-efficiently

Perhaps an individual has maxed out their IRA or 401(k) contributions, and the only place left to invest are the assets under “tax now.” They can still reduce the tax hit using exchange-traded funds, tax-managed funds, and index mutual funds.

Final Thoughts – Tax Planning in Retirement

Retirement might seem like a place where someone can escape and run from taxes, but that isn’t the case. Unfortunately, under certain circumstances, retirees would still need to pay taxes. Tax planning in retirement is necessary early on as it could help people earn more money and acquire better investments for the future.

To those who are a bit out of the loop regarding investments and retirement savings, working with a trusted company specializing in retirement accounts would be the best course of action. One such company people can trust is Augusta.

Augusta is an excellent choice as they have extensive experience in investing precious metals and protecting retirement accounts. This experience and knowledge in the industry allow them to aid investors in making vital financial decisions!

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