One of the biggest risks in retirement isn’t just market volatility.
It’s where your income is coming from and how that income is taxed.
I see a lot of people who have done a great job saving for retirement, but a large percentage of their money is sitting in tax-deferred accounts like 401(k)s and traditional IRAs.
That can create some challenges down the road:
• Required distributions you may not be able to control
• Withdrawals generally taxed as ordinary income
• Less flexibility when tax rates, markets, or your spending needs change
This is one reason I think tax diversification deserves more attention.
The concept is pretty simple:
Have different sources of retirement income that are taxed differently.
That could mean a combination of taxable accounts, tax-deferred accounts, and tax-free accounts like Roth accounts.
Why does that matter?
Because having choices gives you more control.
You may be able to manage your taxable income from year to year.
You may have more flexibility when markets are down.
And you may have more options if tax laws change.
Retirement planning isn’t just about accumulating enough money.
At some point, the question becomes:
How are you going to take it out?
That distribution strategy can be just as important as the strategy you used to build the wealth in the first place.
If you’re getting closer to retirement and want to take a closer look at how tax diversification could fit into your plan, reach out and I’ll send you more information.