Leveraging All 3 Sources of Tax-free Income in Retirement

(don’t forget to checkout the video of this blog too)

The only thing better than a comfortable stream of income in retirement….

…is a comfortable stream of tax-free income in retirement.

Now that doesn’t mean you need to do a Roth Conversion on your entire portfolio (because that often doesn’t make sense), but there are ways to significantly decrease your tax bill in retirement…

And even ways to retire completely tax-free.

Here are the 3 sources of tax-free income you should focus on maximizing:

✅ Social Security Income

Regardless of how much taxable income you have in retirement you will still have a source of tax-free income from Social Security.

Let me explain…

Social Security is taxed based on what’s called “provisional income”.

If you can keep your provisional income low enough you will be able to 100% of your social security income tax-free.

But, even if it’s not, you’ll still collect at least 15% of your Social Security Income tax-free (because of the provisional income rules).

✅ Taxable Retirement Accounts

Yes, I know, I’m talking about tax-free income and here I am bringing up TAXABLE accounts..

But hear me out.

As a married couple in 2024, your standard deduction allows you to take $29,200 per year out of taxable accounts…

Completely tax-free!

You can also pull additional funds in VERY favorable tax brackets.

In fact, in 2024 you can take about $123,000/year out at less than a 9% overall tax rate‼️

This is VERY efficient retirement income withdrawal strategy that allows you to maximize income in the most favorable tax brackets (to keep your tax bill as low as possible).

✅ Roth IRA’s & Cash Value Life Insurance

Roth IRA’s are great.

100% of the income you take out of them is 100% tax-free.

They also transfer to your loved ones 100% tax-free. 🫶

But life insurance is often overlooked as a retirement income stream.

What a lot of people don’t know is that you can take loans against your cash value and they are NOT considered income…

….meaning they are 100% tax-free.

This is a great way to supplement your other sources of tax-free income.

Let’s chat 💬😎