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Navigating Retirement at Tax Time

As the calendar approaches April 15th, there are few things you need to remember to help your retirement savings and reduce your taxable income. These items can ultimately have a big impact on how much your tax liability will be and can really help boost your retirement savings at the same time. Let’s take a look at a few.

If you are still working, one of the easiest things you can do is increase the contributions to your 401k. Since these contributions are pre-tax, you don’t have to pay taxes on this income and it goes directly toward your retirement savings. It’s like killing two birds with one stone! After you meet the maximum of your company match in your 401k, you can contribute to an IRA, possibly avoiding paying taxes on that income. Also, don’t forget about your spouse! Your spouse can have a separate IRA and contributions can be made to that in addition to your own to maximize retirement savings and minimize tax liability. Finally, if your company offers any kind of deferred compensation programs, you might want to consider taking advantage of those as well.

If you are already retired and want to reduce your tax liability, one important way is to avoid distributions from your IRA as much as possible since these distributions are taxable. We’ve found that one of the better ways to help avoid these distributions is to maximize your Social Security income and live on that to the best of your ability. One of the great things about Social Security income is that in some cases it is not taxable. For more information on what you need to know about Social Security, take a look at some our previous posts here and here. Also, if you have part-time income while you are retired, you can contribute that to an IRA for you and your spouse to lower your tax liability.

Tax time is an important annual step in navigating your retirement and we would like to help you with that journey. Contact one of the advisors at Sound Financial Strategies Group today and let us help you navigate your retirement!

Investment advisory services offered through Sound Financial Strategies Group, Inc.("SFSG"), a Registered Investment Adviser.  Securities offered through Comprehensive Asset Management and Servicing, Inc., ("CAMAS") Member FINRA/SIPC.  SFSG and CAMAS are separate and unrelated companies. The opinions voiced in this article are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by CAMAS. CAMAS does not provide tax nor legal advice. 


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