Options for Limiting Taxes during Retirement

Taxes and Retirement pic

Taxes and Retirement
Image: taxes.about.com

Possessing three decades of experience in retirement planning, Barry Kornfeld is the co-founder of First Financial Tax Group. Through his firm, Barry Kornfeld focuses on tax planning and income optimization to maximize clients’ wealth.

Plan a retirement that limits tax implications by opening a Roth individual retirement account (IRA) and downsizing your home. A Roth IRA allows you to save a sum of money that has already been taxed. Available through numerous financial institutions, the account gives you the option to withdraw funds at the age of 59 and a half without paying additional taxes. If you decide to access the funds earlier, be aware that a 10 percent penalty may apply.

During retirement, you may discover that the size of your home exceeds your needs. Downsizing is a reasonable solution to reduce costs associated with maintenance. Furthermore, if your mortgage is paid in full, selling can increase wealth with little to no tax. Use the money to supplement your retirement income or invest it for future gains. It is best to discuss this option with a tax professional to ensure you comply with Internal Revenue Service regulations.

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