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Are your retirement assets tax diversified?

April 12, 2023

Choosing the right accounts for your retirement savings is important, but it's equally important to consider how you'll withdraw money in retirement…and how those withdrawals will be taxed. You know that diversification can help to reduce risk and protect you from wild swings in the stock market, but did you know that diversifying the taxation of your retirement income can help improve your retirement outlook? 

See how tax diversification can help you maximize retirement income and minimize taxes.

With tax diversification, you spread your retirement savings across different tax buckets, giving you more options for tax-efficient withdrawals in the future. You can accumulate money in traditional tax-deferred accounts like 401(k)s and IRAs; tax-free accounts like Roth IRAs and permanent life insurance; and accounts with capital gains tax rates. 

This way, when it comes time to withdraw money in retirement, you can strategically tap into different accounts to minimize taxes and maximize your income. Learn more about tax diversification. 

Tax diversification can also provide a hedge against future tax law changes. By having money in different tax buckets, you can adjust your strategy based on changes in tax rates and laws. You may find that this approach provides needed flexibility in those years when your deductions are much higher or much lower than normal. 

Simply put, tax diversification helps put you in control of your tax bracket. Let’s get together to discuss how this strategy can improve your retirement outlook. Send a quick email to start the conversation

Another way to reduce your tax exposure in retirement is to consider converting some of your traditional IRAs to a tax-free alternative, like a Roth IRA; but that’s a topic for another post.