Additional Coverage:
- 10 Places To Put Your Retirement Money That the IRS Can’t Touch (financebuzz.com)
Smart Tax Moves for Retirees: Protecting Your Nest Egg
Retirement often means a fixed income, making minimizing taxes crucial for stretching your savings. Here are ten tax-advantaged investment options to consider:
- Municipal Bonds: Issued by local governments, these bonds are often exempt from federal income tax, and sometimes even state and local taxes. A good option for steady, low-risk income.
- Roth IRAs: Withdrawals are tax-free after age 59½ (and if the account’s been open for at least five years). Note: earned income is required to contribute.
- Roth 401(k)s: Similar to Roth IRAs, these accounts offer tax-free withdrawals in retirement, but with higher contribution limits. Like Roth IRAs, contributions require earned income.
- Tax-Exempt Mutual Funds: These funds invest in tax-exempt securities like municipal bonds, offering diversification and tax savings.
- Health Savings Accounts (HSAs): A triple tax advantage: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses. Note: contributions stop once you enroll in Medicare.
- Series I Bonds: While generally taxable, the educational exclusion can make these bonds tax-free for qualified education expenses. Interest is also exempt from state and local taxes, and federal taxes can be deferred.
- Tax-Exempt ETFs: Similar to tax-exempt mutual funds, these ETFs offer a simple way to invest in tax-free income sources like municipal bonds.
- 529 Plans: While designed for education, these plans can help grandparents fund their grandchildren’s education tax-free.
- Indexed Universal Life (IUL) Insurance: Premiums aren’t deductible, but the cash value grows tax-free, and the death benefit is tax-free for beneficiaries.
- Traditional Life Insurance: While not providing tax-free income for you directly, the death benefit is generally tax-free for your heirs.
Beyond these investments, consider these financial tips:
- Pay Down Debt: Reduce debt to improve your overall financial health. Explore options like balance transfer cards or debt counseling.
- Boost Your Income: Even a part-time job can significantly supplement your income.
- Cut Expenses: Focus on your largest expenses, like auto insurance, for potential savings.
A travel credit card can help offset vacation costs.
Read More About This Story:
- 10 Places To Put Your Retirement Money That the IRS Can’t Touch (financebuzz.com)