Taxes are on the minds of many as we just passed the 2019 tax deadline.   Unfortunately, many retirees every year fail to properly account for taxes when deciding things such as budgets, withdrawal rates, and whether or not they have the flexibility to make larger purchases. So, what are a variety of techniques that can be employed which help to limit the amount of taxes you pay in retirement and keep more of your hard earned money in your wallet?

  • Consider Relocating To States With Lower Taxes
  • Continue To Maintain A Budget
  • Consult A Tax Professional
  • Don't Forget About Quarterly Estimated Taxes

Consider Relocating To States With Lower Taxes

High cost of living areas often breed some of the highest salaries that allow many to retire comfortably. Unfortunately, these areas also often breed some of the highest taxes in the country. Consider moving to a more tax friendly state so that you will be able to enjoy more of your hard earned dollars throughout your golden years.

Continue To Maintain A Budget

Many of those who are fortunate enough to retire were able to do so by maintaining a strict budget over the years. While retirement means you'll no longer have to punch a time card, it does not mean you should no longer play an active role in your finances. Budgets are perhaps more important during retirement than they are during your working years as they may need to be adjusted based on the performance of your investments.

Consult A Tax Professional

Filing your taxes post retirement can look very different than it did pre-retirement. This is because your main sources of income have drastically changed. Whereas you were once drawing your money from a weekly or monthly paycheck, you may now be withdrawing from a variety of accounts such as a 401(k), IRA, annuity and even Social Security. Each of these retirement vehicles contains its own subsection within the federal tax code and is taxed at varying rates based on many different factors. Rather than struggling through the monotony of tax code, simply place your trust in a certified tax professional that does this for a living. This way, you can rest assured everything is filed correctly which can help you avoid paying penalties over time.

Don't Forget About Quarterly Estimated Taxes

One of the most frequent mistakes that some newly retired people make is failing to file quarterly estimated taxes. This is largely because, when you are working, taxes are taken out of every paycheck for you by your employer and filed on your behalf. This lulls some recent retirees into the false sense of security that can have them stuck with a large penalty when they attempt to file annually by the regular April 15th deadline. Some retirees should estimate the taxes they are liable for once every quarter so as to satisfy their federal, state, and local tax obligations. To keep you from forgetting, either set a quarterly reminder on a phone or computer or, if you care to keep your schedule by hand, make a note in your calendar at least two weeks prior to each quarterly deadline. The quarterly deadlines can all be found on the website of the Internal Revenue Service. 

Regardless of your current tax situation, retirement should be something that is celebrated. Stressing is something that should be left behind with your working years. BY properly planning to address any and all tax liabilities that may pop up in retirement, you can be better prepared for what's to come and pay the minimum necessary taxes so that your hard earned money doesn't go to waste.

Many people spend years dreaming about the day they will retire. They envision spending time in their vacation home’s with their family and friends at their sides. However, for some, this vision doesn’t become reality.  Instead, they spend their golden years working instead of at the golf course or having coffee with friends. If you have a sneaking suspicion that you may be a person who needs to delay retirement, then here’s what you need to know. Many factors contribute to a delayed retirement. Here are three of the most common ones.

1. You Have Too Little Money Saved

If you retire at age 67 and live until age 95, then you’ll need roughly 28 to 30 years’ worth of income saved up in order to retire. So, assuming this is true, just how much money would you need to have saved if you do live that long?  According to CNBC, a 30-year retirement requires at least a million dollars to fund it.

Most Americans do not have that much money in their retirement accounts, not by a long shot. The median savings amount among Baby Boomers is only $200,000. For those who do not have enough saved for retirement, the solution may be to work longer and to save more in the process.

In order to get ahead of this trend, it’s necessary to create a plan for the retirement years. It’s impossible to hit a target that you don’t have.

2. The Amount of Education You Have Plays a Role

Retirement is delayed among those who have advanced degrees. The reasons behind this are at least two-fold. For one thing, those who took the 10 or 12 years necessary to get advanced degrees stay in school longer and therefore, join the workforce later in life. This delays their ability to contribute to retirement savings accounts and to save the money necessary to retire.

The kind of work that people in this demographic do also contributes to their decision to stay in the workforce for a longer amount of time. The work isn’t physically demanding and often pays a higher salary. As a side benefit (and another related contributing factor), this demographic of workers usually work at jobs that they actually like. For them, retirement isn’t much of a motivation. They like what they do, so they stay in the workforce for a longer time. Thus, they choose to delay their own retirement.


3. You Have Too Much Debt

According to Market Watch, having too much debt can take a big bite out of your retirement savings. The more debt you have to pay down, the less money you have to contribute to your retirement savings.

The sad reality is that many of us will contribute the majority of the funds in our 401(k) accounts. But that isn’t the only challenge facing future retirees. The amount of social security that they can expect is going down and the age at which they can take from their social security accounts keeps getting pushed back. Due to all of these challenges, most people aged 50 or over only have about $10,000 saved.

One of the biggest contributors to debt during a person’s retirement years is the cost of healthcare. Healthcare costs eat up over a quarter of a million dollars on average during a person’s retirement years.  Some of this debt comes from illnesses, like diabetes or cancer. Some of the expense comes from having to pay for healthcare out of pocket. If those healthcare costs come before retirement, say in the case of a catastrophic illness, then retirement will be delayed for an indeterminate amount of time.

Create A Plan For YOU

If you’re one of those lucky people who love what you do, then you may not care that your retirement gets delayed by 10, 20, 30 years or more. However, if you count yourself among those who either has not saved enough or who has too much debt, then you need to take a serious look at your finances. The only way you will be able to retirement is to take control of your finances and to create a plan for retirement. If you find yourself in that boat, then your best bet may be to talk to a financial planner about what you can do to turn the tide of your finances.

Before you turn 60 years old, your 401k plan has a set up that you may want to take advantage of. In the past, there has been a lot of middle-aged taxpayers who were scared to open certain bank accounts. Nowadays, those thoughts of being financially taken advantage of are not what investors are thinking about. In fact, if you have contributed to a 401k plan, you can have in-service withdrawals happen before you turn 60. Primarily, these withdrawals are those who are still employed at that age.

Whenever you are starting a 401k plan, it's best to ask about all of the benefits of having the account before starting your investing process. There are some advantages and disadvantages that you would have to think about. For instance, the advantages of taking charge of your 401k through in-service withdrawals are:

  • greater flexibility
  • benefits for beneficiaries
  • exceptions on certain penalties
  • protection of the money you have invested or earned over the account
  • if you have stock in your company, this could be a great retirement plan
  • early retirement could be an option
  • 401k plans will move to another employer when you turn 55 or older with no penalty

When choosing to find out about the disadvantages that an in-service withdrawal contains, you may run into the following issues: 

  • If you have an IRA, your penalties will take place if you are under 60 years old
  • moving your money from a 401k plan to an IRA changes the rules for your account
  • 401k protects you from creditors that would want to be paid through your account

There are different employers that will offer in-service withdrawal plans. On the other hand, there are employers that don't offer this valuable money-making tool. For advice on investing, you can speak to someone in the administrative department at your job. From there, you should be guided to the right solution. For more information, you can research 401k plans at contolling your assets.

When an employee qualifies for an in-service withdrawal, it can be looked at as an early retirement contribution to themselves. In fact, you can use that money to vacation and travel without worrying about penalties at all. Additionally, you don't have to worry about tax laws diminishing what you've earned. Each employer that offers this in-service withdrawal plan has ordering rules. If you want to read about in-service withdrawal plans a little more, you can research the topic at in-service withdrawl.

Believe it or not, your employer will start helping you plan an in-service withdrawal through your 401k at 59½ years old. You could feel your best days once you plan the withdrawals. For affluent individuals, a 401k plan could be the very reason why you start a new adventure or look for a new trade. Moreover, there could be a new lease on life for you as well as your family. 



Retirement income is not a one size fits all calculation as wants and needs vary significantly from one person to the next. Several factors such as life expectancy inflation, and balances do play a huge part but considering your retirement expectations for the "golden years" will help in the planning process to make the most of your retirement.

Remember your first payday? How excited were you to get that hard-earned cash in your hands? You opened the envelope and found all sorts of deductions from your pay, federal taxes, social security, and healthcare expenses. You officially started paying bills and contributing to your retirement years with that first paycheck. You continued to work hard and grew in your career, you were given opportunities for employee stock purchase plans, profit sharing, and retirement plans, including pensions and 401Ks. You on your way and building your nest egg.

As you get closer to the retirement years, you need to start making plans. Whether it be traveling, a summer home purchase, or just relaxing with family, your plans are important to your retirement income needs. Some people retire right at 62 when they can collect social security benefits. Did you know if you continue to work till 66 you will receive the full benefit payout? And if you work till 70, you will receive a 32% bonus!

Sadly, but understandably, many new retirees worry they haven’t saved enough. Sometimes life happens and plans become changed. You may hesitate and not do the things you looked forward to during your working years due to fear of over spending or running out of money. When this happens, retirees often realize they had enough funds for their plans when it’s too late. Their health deteriorated, and that can make it hard for us to enjoy the things we were looking most forward to in our retirement years.

How can we prevent emotions from controlling our spending? By planning. Part of your retirement plan should include setting an amount for your retirement paycheck. Much like the paycheck received from work, a retirement paycheck is an amount you set to cover all monthly expenses and include the costs of your retirement activities, like traveling or moving.

It’s generally safe to assume you will need 80% of your current salary. This should serve as a good starting point. Then, you can look at your plans. Is there a big wedding or healthcare costs that may incur a large payment? Where will you be living? Many retirees may move into a retirement community while others may just downsize their home or stay put where they are.

As you look at your plans, be flexible but realistic. Your income needs may vary from year to year. You may buy a new car ever 5 years or so and vacations may be every other year. Some people will continue to work after retiring. Adjust accordingly. There is no need to take more money than out of your retirement vehicles than required. Allow those long-term savings to grow until it’s necessary to retrieve them. You will find confidence in knowing you have a steady income stream with consistent retirement paychecks to meet your spending needs.


If you’re looking for planning help, we are here to guide you to and through your retirement years.