How to Be Richer in Retirement

Transitioning from a steady paycheck to retirement can be quite a shock for some. Even with careful saving and planning, knowing which funds to use to pay certain expenses may be a challenge.

“You have greatest control over your tax liability between the time you leave your job and your 70th birthday.” This occurs because at the age of 70 you can take out the maximum Social Security benefit, as well as at 70 1/2 you must take yearly minimum distributions from a traditional IRA (if you have one). These required funds may incur a higher tax bill in your golden years than you anticipated.

Ty A. Bernicke, a financial planner in Altoona, Wisconsin, encourages clients to “diversify their tax planning” by dividing assets into three different buckets: taxable accounts; tax-deferred accounts, such as traditional IRAs and 401(k)s; and Roths.

See Deborah L. Jacobs, How to Be Richer in Retirement, DeborahJacobs.com, May 17, 2018.