By Greg Hart, CFP®

If you’ve ever worked with a financial advisor or CPA, then you probably know there are ways to minimize your overall tax burden—strategies like bunching, taking advantage of tax-deferred savings opportunities, and claiming tax credits you’re eligible for. But when you retire, there are many more strategies available to you than there ever were during your working years.

This is good news, but it also puts many retirees at risk. Those who don’t engage in strategic tax planning could end up paying much more in taxes than they need to with significant impacts on their bottom line and quality of life in retirement.

No one wants to pay more than their fair share in taxes, and you certainly shouldn’t have to. But the truth is, tax planning isn’t a simple process, and it’s certainly not a DIY project you can tackle on your own. However, failing to do strategic tax planning in retirement could significantly eat into your hard-earned savings and throw a wrench into an otherwise sound retirement plan.

Why Tax Planning Is Important in Retirement

In retirement, strategic tax planning is even more complex than it was in your working years.  When you transition into retirement, you’re likely drawing income from a combination of sources, including but not limited to:

  • 401(k) plans
  • Individual retirement accounts
  • A company pension
  • Social Security 
  • Health savings accounts
  • Taxable investment/brokerage accounts

Each of these income sources has different tax implications. Some of them, such as a 401(k) or traditional IRA, allow you to contribute tax-deferred savings. A retirement tax advisor can help you plan how you’ll pay taxes on those withdrawals in retirement in the most efficient manner. Other assets may trigger capital gains taxes, which a tax advisor can help you minimize as well.

Other sources of income, like your Social Security benefits, are taxed at higher rates if you’re not careful about when you draw income from other sources. For example, if your income exceeds a certain threshold, your Social Security benefits could be taxed at a whopping 85%. A tax advisor can help you structure withdrawals from your different assets so you can maintain your quality of life without overpaying Social Security taxes.

How a Retirement Tax Advisor Can Help You

Retirement tax advisors may be able to help you move from feeling stressed about your retirement income strategies to feeling confident about your plan. By keeping more of your hard-earned savings, you provide yourself with more flexibility to do the things you want in retirement, spoil your grandchildren, or even leave a larger inheritance for your loved ones when you pass away.

If you have multiple retirement assets in taxable, tax-deferred, and tax-free accounts, you may benefit from working with a retirement tax advisor. Or, if you’re a high earner and want to minimize your Medicare premiums and/or the taxes you pay on Social Security benefits, you should consider partnering with a tax advisor. A retirement tax advisor can help you:

  • Diversify your assets for tax savings.
  • Shift assets from tax-deferred accounts to tax-free Roth IRAs at appropriate intervals.
  • Make use of a tax-loss harvesting strategy to offset your capital gains.
  • Make use of bunching strategies to maximize your deductions.
  • Minimize your tax liability for the rest of your life.
  • Lower your Medicare premiums.

There’s so much you can do in retirement to lower your tax burden and create more financial security for your retirement. If you don’t engage in strategic tax planning, you’ll never know how many hundreds or thousands of dollars you could be saving for yourself and your family.

Partner With Us

At Haddon Wealth Management, we’re passionate about helping people retire with more confidence and less worry that they’ll run out of money. If you need assistance developing sound tax strategies in retirement, call us at (856) 888-1744 or contact us online to schedule a complimentary get-acquainted meeting.

About Greg

Gregory M. Hart, CFP® is the founder and managing director of Haddon Wealth Management, LLC, a registered investment advisory firm that provides comprehensive wealth management (in-depth financial planning and sophisticated investment management) for clients who value a relationship-driven approach that delivers customized solutions. Based in Haddonfield, New Jersey, Greg works with clients throughout the Delaware Valley, as well as nationwide. To learn more, connect with Greg on LinkedIn, visit our website at, or call (856)-888-1744 to begin a discussion.

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