Many people think that once they retire they don’t really need to worry about saving on taxes anymore yet nothing could be further from the truth!

Before I get into some of the best tax-saving strategies for retirees don’t forget to check out my video on how to avoid one of the biggest retirement mistakes that most people make. 

Click here to watch it.

See the video of the version of this article here:


So, what are the 6 Best Tax Saving Strategies for Rockford Retirees?

1. Know where you stand

As a financial advisor in Rockford I find that many people are worried about taxes when they really shouldn’t be and others who should be worried about taxes aren’t paying enough attention. 

Why? Because they really don’t know where they stand.

If you haven’t saved all that much then chances are your tax issues are not your biggest problem heading into retirement. You may need to focus on reducing expenses or having a supplemental income in retirement. 

But whether you’re a good saver of not, you need to know what taxes will look like in retirement. 

We use a special Tax Map to show clients what their tax bracket will look like in retirement vs what it is today. This allows you to see “what if” scenarios in the future and helps you to plan accordingly.

This is really important information to have when trying to plan for retirement.

Click here to schedule a call to learn more about how we may be able to help you.

2. Practice Good Tax Diversification

Many people have been saving for 30 or 40 years into a company-sponsored retirement plan like a 401k program. But they have not invested anywhere else. 

That is a real problem we see every day. 

Just like you need to diversify your investments, you also need to diversify what tax buckets you save your money in. 

Hint: Having all of your money tax-deferred is not generally a good strategy.

If you have too much money saved in your 401k or an IRA, you will reach a point where the government will make you start withdrawing that money just so you can pay tax on it. 

At that point, you will begin to lose control over your tax situation and you may wake up feeling like you made a terrible mistake. 

Instead it is a good practice to save at least some of your money in tax-free buckets and even taxable investments. This way you will have multiple tax buckets to draw from in retirement. 

In other words, you’ll have tax diversification.

3. Start Converting Tax Deferred Assets to Tax-Free Assets

Many people who have saved almost exclusively in a tax-deferred 401k or IRA. Then they realize that this may be a problem. But not to worry! You can still convert some of that money strategically into a Roth IRA, a LIRP, or other tax-advantaged investments. 

It’s never too late to tax diversify!

You don’t have to convert your entire 401k or IRA into tax-favored assets all at once. 

Oftentimes, the best strategy is to convert a little at a time to avoid getting hit with high taxes all in one year. 

So start looking for ways to convert tax-deferred assets to tax-free assets as soon as possible. 

Click here to schedule a call if you’d like me to help you do this.

4. Understand how Social Security is taxed

Social Security is not taxed the same as ordinary income or capital gains, it is taxed based on a special formula called ‘Provisional Income’. 

The next logical question is…

What is provision income? What counts and what doesn’t? 

Once you know what your provisional income is, you will then be able to apply that to a threshold. 

Anything over the threshold will become taxable on your return and there are multiple brackets. 

The more provisional income you have the more of your Social Security income will be taxed and the less money you get to keep. 

Understanding just this one element can be crucial to retire!

For example, if you can get your higher threshold down to the lower threshold, you can potentially save you a lot of money on taxes in retirement.

5. Look at all of your options carefully as some items may be counterintuitive

What do I mean by ‘counterintuitive’? 

Well, for example, you might have heard that Municipal Bonds are Federally Tax-Free. 

But did you know that the income you earn from them is counted as provisional income and could very well cause your Social Security to become taxable? So it’s not really completely tax-free because it could cause some of your social security to become taxable.

Here’s another one:

Many people are afraid of taking out a Reverse Mortgage, but did you know that the income you can take from the cash otherwise sitting idle in your home can be removed as an income stream that is completely income tax-free and doesn’t affect your social security? 

So, maybe it’s worth a second look. 

6. Work with a holistic advisor

Many people call themselves ‘Financial Advisors’ these days, but not all advisors are created equal. 

If your advisor works for a big brokerage firm he may have the firm’s interest firmly in mind when he makes recommendations. After all, he gets paid a commission to sell what the firm wants him to sell. 

If your advisor works for a big bank the same is true as above. He or she works for the Bank and first and foremost represents the bank’s interest. 

This does not make them bad people. Often they are good people that are part of a broken system. 

So, if you are trying to figure out what to do with your life savings, you need to be working with an independent fiduciary advisor that works for you first and foremost and not some other entity. 

If your advisor says they can’t help you with Tax Planning, Estate Planning, Income Planning, Social Security Optimization and all they want to talk about is growing your money, you can probably guess what kind of advisor you have. Don’t get me wrong, growing your money is important. But there are also a lot of other areas that need to be addressed in retirement.

That’s why it’s a good idea to make sure you’re working with someone who is legally obligated to work for you first and put your interests first. 

By the way, if you haven’t yet watched my short 10 minute video about one of the biggest mistakes most retirees make, please check it out by clicking here. You will be glad you did!

Disclosure: Investment Advisory Services offered through Retirement Wealth Advisors, LLC. (RWA) a Registered Investment Advisor. Rockford Retirement Planning, Inc. (RRP,Inc.) and RWA are not affiliated. Investing involves risk
including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Opinions expressed are subject to change without notice and are not intended as investment
advice or to predict future performance. Past performance does not guarantee future results. Consult your financial professional before making any investment decision.

This information is designed to provide general information on the subjects covered, it is not, however, intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or arrangement. Please note that RRP,Inc. and its affiliates do not give legal or tax advice. You are encouraged to consult your tax advisor or attorney.

Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurer. Any references to protection benefits or lifetime income generally refer to fixed insurance products. They do not refer, in any way to securities or investment advisory products or services. Fixed Insurance and Annuity product guarantees are subject to the claims
‐paying ability of the issuing company and are not offered by Retirement Wealth Advisors, LLC.

Social Security/Government Program Disclosure: Antonio Filippone of Rockford Retirement Planning, Inc and Retirement Wealth Advisors, LLC are not affiliated with or endorsed by the Social Security Administration or any other government agency

MDRT Disclosure: The Million Dollar Round Table is a trade association to help insurance brokers and financial advisors establish best business practices and develop ethical and effective ways to increase client interest in financial products, specifically risk-based products like life insurance, disability, and long-term care. Annual qualification requirements include demonstrating a set annual production requirement and agreeing to a code of ethics but are not based on client experience or performance. For more information regarding the Million Dollar Round Table eligibility, please see Membership in no way constitutes an endorsement from Million Dollar Round table or any client.

Top of the Table:To qualify for top of the table a member must demonstrate an annual commission of six times the base requirement.

Reviews on third-party websites (Google, Yelp, etc.) for Rockford Retirement Planning may have been provided an incentive of being entered into a raffle in exchange for the review.



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