As we move into retirement, tax planning becomes more critical than ever. You’ve worked hard to build a nest egg—now it’s time to make sure you’re not giving away more of it than necessary to taxes. At Surprenant, Beneski & Nunes, P.C., we help seniors across Southeastern Massachusetts reduce their tax burden through smart planning strategies. Whether you’re already retired or planning ahead, we can help you make the most of your income.
Understand How Retirement Income Is Taxed
Retirement brings a shift in how your income is taxed. Instead of earning a paycheck, you may be drawing from several sources—each taxed differently. Understanding how these pieces fit together can help you avoid unnecessary tax hits.
Here are a few common income sources and how they’re treated:
- Required Minimum Distributions (RMDs): Once you turn 73, you’re required to take minimum withdrawals from most retirement accounts. These withdrawals are considered ordinary income and are taxable.
- Traditional IRAs and 401(k)s: Withdrawals from these accounts are taxed as regular income.
- Roth IRAs: Qualified withdrawals are tax-free, making Roth conversions a strategy worth considering.
- Investment income: Dividends, capital gains, and interest may all be taxable, depending on your overall income.
By looking at when and how you withdraw from your accounts, we can help you reduce your taxable income each year and keep your tax bracket manageable.
Know When Social Security Is Taxable
Many people are surprised to learn that Social Security benefits may be taxed. It depends on what the IRS calls your “provisional income,” which includes:
- Half of your Social Security benefits
- Taxable income from other sources
- Tax-exempt interest, such as from municipal bonds
If your provisional income exceeds certain thresholds, up to 85% of your benefits could be taxable.
We can help you look at the big picture. By adjusting how and when you take income from other sources, you may be able to reduce or even avoid taxes on your Social Security. For some, delaying Social Security benefits or coordinating distributions more carefully can make a big difference over time.
Smart Investment Strategies for Seniors
In retirement, structuring your investments to reduce taxes should be an important part of your plan. Some strategies that may help include:
- Choosing tax-efficient investments, such as index funds or municipal bonds
- Harvesting losses to offset capital gains
- Holding investments in the right types of accounts—for example, placing tax-heavy investments in IRAs while using taxable accounts for assets that generate less income
Your financial advisor can suggest an investment strategy to support your overall retirement goals and reduce your yearly tax bill.
Take Advantage of Deductions and Credits
Don’t leave money on the table. There are several deductions and credits available to older adults, and it’s worth reviewing your options every year. You may qualify for:
- A higher standard deduction once you reach age 65
- Deductions for medical and dental expenses that exceed a percentage of your income
- The credit for the elderly or disabled, depending on your filing status and income level
Many of these opportunities are missed simply because people don’t know they exist. We’ll help you determine what applies to your situation and make sure you’re claiming what you’re entitled to.
Bring It All Together with a Personalized Plan
Good tax planning isn’t something you do once—it’s something that evolves with you. When we create a plan tailored to your needs, we look at how everything fits together: your retirement accounts, investments, income sources, medical needs, and estate planning goals.
The result is a clearer picture of your financial future and more confidence that your money will last. We can advise you throughout the process, answering your questions and making sure you feel informed—not overwhelmed.
Contact Our Southeastern Massachusetts Tax Planning for Seniors Attorney
Ready to take control of your tax picture in retirement? At Surprenant, Beneski & Nunes, P.C., we help you keep more of what you’ve earned. Contact us today to schedule a consultation, and let’s talk about how we can support your goals.