There are plenty of issues to worry about when in retirement. The best way to make sure your retirement is going to be a successful one and one that you don't have to worry about money is to make sure you have a strong retirement plan.
Most retirement plans take into consideration mortgage, health care and travel/leisure costs but fail to take in consideration of the costliest impacts on your retirement nest egg, taxes.
According to a survey done by Lincoln Financial Group, retirees significantly underestimate the impact of taxes during their retirement. Of those surveyed, 36% said taxes were a larger expense than they anticipated and 23% admitted not even considering tax expenses in their retirement plan.
If you let them, taxes canbe a pretty big virus to your retirement plan. You don't usually have to deal with them when investing or planning for your retirement. It is something that comes up when you are actually retired.
Because taxes can have a huge affect on your retirement nest egg there are a few things you can do to reduce taxes while in retirement. A few tips to lowering retirement taxes:
Lower Your Expenses
This is pretty straight forward but none the less it can have a great impact on the taxes you pay. The simple idea is this, the more debt you get rid of the less you will have to withdrawl from your retirement account and therfore the less taxes you'll have to pay.
Having different types of retirement accounts is a good way to spread out the taxes as well. Many times retirees think that they will be in a lower tax bracket because they are not working anymore. You must remember though that income will possibly be coming from social security, property rentals, taxable brokerage accounts, pensions, bonds and savings and all are susceptable to being taxed on some level.
These are just a few of the many different things that you can do to make sure that taxes don't eat away at your retirement nest egg.
As with all retirement investing make sure that you are aware of what you are investing in. Most of the time you will find that you are invested in stocks and bonds. While you can diversify with stocks and bonds it isn't as diversified as you should. Diversifying outside of the stock market is the way to go. You can do this by investing in things that you know like real estate or gold.
In ordert to get the most out of your retirement you need to make sure you stay up on your retirement goals. Make sure you re-evaluate your retirement goals regularly and are doing as much as you can to have that dream retirement.
Author: Nick Barker