Diversify Your Tax Buckets in Retirement (don’t have all tax-free money!)

(don’t forget to checkout the video too)

You’ll often hear advisors saying that you should diversity your portfolio in retirement, which just means to spread out your investments amongst different categories, so you are participating in all of them.

This is a great strategy for investing.

But what’s even more important is diversifying your tax buckets in retirement.

By diversifying your tax buckets in retirement you are positioning yourself for a tax-free retirement, which is a wonderful goal for retiring with as much take-home retirement income as possible.

But, you’re also leveraging the power of the BEST dollars around… and those are actually your TAXABLE retirement dollars, such as your 403b, 401k, and even your Traditional IRA’s…

You see, you can contribute to these accounts and take a tax-deduction each year…

Then, you allow that money to grow completely tax-deferred for decades…

And THEN, if you do everything right, you can pull the money out of your taxable accounts completely tax-free.

(bear with me for a second… this will start to make sense here in a moment)

You just have to ensure that the income you’re taking out is less than your standard deduction in retirement.

This is one of the great retirement planning secrets that actually allows you to collect taxable money, free of any taxes.

Your standard deduction allows you to pull money out of taxable accounts completely tax-free by offsetting that income against your standard deduction on your tax return.

That income might not be enough for you to fully retire on, and that’s why repositioning some of your taxable money into Roth IRA’s (if it makes sense from an income standpoint) is still important.

Plus having liquid cash-value inside of a life insurance contract can help you fully leverage the power of this strategy by giving you accessible money that you can tap into without creating “taxable income”.

So if you’ve diversified your tax buckets, not only can you pull unlimited tax-free dollars out of your Roth IRA and life insurance contracts without triggering taxes on your social security, but you are taking FULL ADVANTAGE of the tax-free possibility of your taxable money as well.

So while diversifying your investments is important, diversifying your tax buckets is even more important!

Let’s chat 💬😎