Retirement changes your life in many ways, including the way you look at finances. Whether you plan to retire a year from now or 15 years from now, it’s never too early to start saving. A big part of your overall financial plan should center around tax planning. Unfortunately, it’s a very important aspect to retirement that many people don’t consider.
We at Ferguson, Timar & Company have compiled a list of tax planning tips to help you be better prepared for your retirement years.
1. Understand the Tax Benefits
When it comes to saving for retirement, you’ll want to take advantage of the favorable tax benefits available with IRAs, 401(k)s and other types of investment accounts. Most retirement accounts allow you to contribute funds tax-free, which means you can be earning more money before it has to be taken out. In addition, contributions are excluded from your taxable income, which is a nice added benefit.
2. Make the Maximum Pre-Tax Contributions
As you are saving for your retirement, try to contribute as much as you can afford to your retirement accounts. The more you put in, the more financial growth you will achieve and the more money you will have to fall back on.
3. Know Your Tax Liabilities
It is important to understand that as you approach retirement, you will likely have less expenses to write off, which lowers the exemptions and tax deductions available to you. Also, remember that when you ultimately pull money out of your retirement savings accounts, you will be subject to the requisite income taxes. The same goes for any pension funds. Be sure to talk with a tax professional like Ferguson, Timar & Company to better understand how your retirement will affect your tax liabilities.
Retirement is a rewarding part of a long job journey, so enjoy it by having the right financial strategy implemented in advance. Seek the help and advice of a knowledgeable tax professional like Ferguson, Timar & Company. Our tax experts can help you develop a sound tax plan to get you ready for retirement.
To learn more about tax planning for retirement or to schedule a tax consultation, contact Ferguson, Timar & Company today.