Today’s Prep:
Are you nervous about all the taxes you might have to pay in retirement? We talk through strategies you can implement now to reduce your taxes down the road.
Equipping Points:
If most of your retirement savings are sitting in a 401(k) or IRAs, you’ll need some strategies to handle the taxes you’ll have to pay when you withdraw from these accounts. On today’s episode of the podcast, Eric shares a few different strategies that will reduce your tax burden in retirement.
The tax you owe later is hard to calculate since you won’t know what taxes will be down the line. Reducing the amount you currently put into a 401(k) is one strategy, but then where should that money go? Check to see if your plan as a Roth contribution in the 401(k). Another place is to put money in the Roth IRA, as long as you are within the income limits. Doing both puts you in a great position for retirement.
Is it okay to have both a traditional 401(k) and also a Roth IRA? You can’t ever have too much saved for retirement. If you are eligible for the Roth contribution, it’s a great account to put money away in. If your income is over the limit to contribute into a Roth IRA, what are your options?
In the tax-free toolbox, there are three tools: Roth accounts, municipal bond interest, and life insurance. Life insurance proceeds are tax-free. There’s no limit to what you can put in life insurance. It can accumulate tax-free, take it out tax-free, and it passes tax-free. High income earners will use life insurance as an accumulation vehicle.
If you chose to pursue a Roth conversion, what do you need to know? How much should you convert to a Roth IRA? It really depends on how much tax you’re willing to pay. Most people want to stay under the 25 percent tax bracket. This is a conversation you should be having with your financial advisor.
Listen to the entire episode or use the timestamps below to skip ahead.
0:46 – What are tax strategies to consider?
1:11 – Reducing the 401(k) contributions.
3:22 – If you don’t have a Roth option at work, should you do a Roth IRA?
4:41 – Would funding a cash value life insurance be a good strategy?
7:48 – What do we need to know about Roth conversions?
Today’s Takeaway:
“Qualified plans do two things: they defer the tax, but they also defer the tax calculation.“
-Eric Peterson
Related Resources:
Subscribe To The Podcast:
Apple Podcasts - Google Podcasts - Spotify - Stitcher - iHeartRadio - TuneIn
Check out some other recent episodes
Do You Have These Blind Spots In Your Retirement Plan?
Many people can have a couple of “blind spots” so to speak when it comes to their retirement plans. Do you worry you may not be accounting for everything you might need for your retirement? Then today’s episode is perfect for you!
Read More
Inside Out: How We Can Look at Finances Through the Characters of Pixar’s Latest Flick
There can be a lot of emotions when it comes to investing and planning for retirement. And what better way to discuss those emotions than through the characters of Pixar’s latest film, Inside Out 2?
Read More
The Importance of Preventative Care
Preventative care isn’t just for your health; it’s essential for your financial well-being too. By consulting a financial advisor early and often, you can avoid financial distress and make informed decisions that lead to a secure and fulfilling retirement. Many people will put it off for fear they will be told something they don’t want to hear or because of the perceived costs of financial advisors.
Read More
Preparing for Retirement like Noah’s Ark
Financial planning involves a lot of planning ahead, much like Noah did when he started building the ark long before the rain began. This metaphor serves as a powerful reminder that proactive planning is essential for weathering financial storms. Eric highlights that while we can’t predict events like market crashes or global pandemics, we can prepare for them by stress-testing our financial plans.
Read More
Retirement Income
When planning for retirement, one of the most critical aspects to consider is your income. But what does this mean, and how can you ensure you have enough income to cover your needs and desires?
Read More
Retirement Checklist
Retirement is a significant milestone that requires careful planning and preparation. In today’s podcast, Eric shares a comprehensive checklist to ensure you’re fully prepared for your golden years.
Read More
Financial Wisdom from Mark Twain
In the latest episode of the Retirement Ready Podcast, Eric invites us to explore the timeless wisdom of Mark Twain and how it applies to modern financial planning. Mark Twain, known for his wit and keen observations, offers quotes that are surprisingly relevant to today’s financial landscape. Eric takes these quotes and translates them into practical advice for those planning their retirement.
Read More
Understanding Bonds in Today’s Market
Are bonds really the safe investment we’ve always been told they are? What percentage of assets should a retiree or pre-retiree hold in bonds? In today’s episode, Eric addresses some of his most frequently asked questions about the world of bonds…
Read More
Understanding Your Financial Statements
Financial statements can often feel like a foreign language, filled with jargon and numbers that seem to have little relevance to your everyday life. However, understanding these documents is crucial for effective retirement planning. In the latest episode of the Retirement Ready Podcast, Eric breaks down the essentials of reading and interpreting your financial statements.
Read More
From Graduation to Retirement
This one goes to the grads! Whether you know someone graduating high school, college, or even preschool, graduation marks a new stage and season in life. Similarly, retirement is a new chapter in life. It’s a time of change, celebration, and sometimes, uncertainty. On today’s show, we talk through the similarities between leaving school and entering retirement.
Read More