As people prepare for retirement, taxes become a huge issue requiring expert preparation. The key is to ensure that the retirement portfolio is designed in a manner to limit the effect of taxes on retirement income as well as planned wealth transfers. For Americans who are relying on social security as their sole income, there is no worry about having a taxable retirement income. For the many retirees who plan utilizing an additional source for income, assessing their tax liability will be necessary to ensure they minimize the cost of receiving their benefit.
The easiest way to make minimize the tax liability is to minimize the amount of funds needed to cover retirement needs. By paying off debts such as the mortgage prior to retirement you can drastically lower the amount of income needed to provide a solid life style throughout retirement.
Another key way to avoid taxes is through diversification of assets and retirement income streams. For the ideal diversification of a nest egg retirees should seek the guidance of a retirement income expert who can effectively diagnose their tax problem and develop a resolution that will minimize the amount of income tax paid and maximize the amount of retirement income or tax free death benefit to their beneficiaries.
For more information on retirement planning and how to save your retirement from taxable income visit the Annuity Think Tank.
To read the article on avoiding social security income taxes, click here.