Top tax strategies retirees could consider

As retirement approaches, many people focus on saving and investing to ensure a comfortable retirement. However, it's also important to consider potential tax savings in retirement, as they can significantly impact one's overall financial situation. Here are some potential tax savings in retirement that are often missed:

1. Delaying Social Security Benefits
Many retirees choose to start receiving Social Security benefits as soon as they become eligible, typically at age 62. However, delaying benefits until age 70 can significantly increase monthly payments and potentially reduce taxes in retirement. Delaying benefits can also result in higher survivor benefits for spouses.

2. Roth Conversions
Retirees with traditional retirement accounts, such as 401(k)s and IRAs, can potentially save on taxes by converting those accounts to Roth accounts. Roth accounts are funded with after-tax dollars, which means that withdrawals in retirement are tax-free if certain conditions are met. While there are taxes to be paid on the conversion, retirees can strategically time conversions to reduce their overall tax liability.

3. Health Savings Accounts
Health Savings Accounts (HSAs) are a tax-advantaged way to save for medical expenses in retirement. Contributions to HSAs are tax-deductible, and withdrawals for qualified medical expenses are tax-free. Retirees can also use HSAs to pay for long-term care insurance premiums, which can be tax-deductible.

4. Charitable Contributions
Retirees can potentially reduce taxes by making charitable contributions. Donations to qualified charitable organizations are tax-deductible, and retirees can also donate appreciated assets, such as stocks, to potentially reduce capital gains taxes.

5. Retirement Plan Contributions
Retirees who continue to work can potentially save on taxes by contributing to retirement plans, such as 401(k)s or IRAs. These contributions are tax-deductible and can potentially lower taxable income in retirement.

In conclusion, potential tax savings in retirement are often overlooked, but can significantly impact one's overall financial situation. Delaying Social Security benefits, Roth conversions, health savings accounts, charitable contributions, and retirement plan contributions are just a few examples of potential tax savings in retirement. It's important to consult with a financial advisor to determine the best tax strategies for individual retirement goals and situations

The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of Mark Vivian and not necessarily those of Raymond James.

Raymond James and its advisors do not offer tax advice. You should discuss any tax matters with the appropriate professional.