The Optimal 4-Step Strategy for Tax-free Retirement Income

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

Everybody wants to achieve a tax-free retirement but that does not mean all your money should be inside of a Roth IRA.

In fact, having all of your money in a Roth IRA is a VERY inefficient tax strategy that completely neglects the BEST tax bucket to pull money from in retirement

Not only do you want to maximize tax-deductions saving for retirement, but you also want to position yourself for strategic income withdrawals in retirement…

Follow these 4 🔑 steps to do just that:

✅ Step 1: Delay social security as long as possible (to age 70 if possible)

This gives you more time to fully leverage your standard deduction in retirement to offset income coming out of TAXABLE retirement accounts (because you’re not bound by the provisional income limits of social security).

This will also help ensure that your required minimum distributions (RMDs) don’t become too large that they force you into a higher tax bracket in the later years of retirement because your taxable bucket has gotten too large.

✅ Step 2: Create guaranteed income in retirement with non-qualified money FIRST

Leveraging the income-paying ability of an insurance company is the best way to maximize your retirement income …

But by focusing on income with “non-qualified” money first, the majority of that income stream will not be considered “taxable” income, but rather a return of principle (which you have already paid taxes on).

✅ Step 3: Strategically pull money from your taxable retirement accounts prior to RMDs

Whether using an annuity or just taking flexible distributions from your retirement accounts, it’s smart to take all of the tax-free dollars you can out of your taxable accounts EVERY YEAR before your RMDs start (this means you are choosing your tax bracket, rather than being forced in retirement).

You may also decide to pull some supplemental income from your taxable accounts to prevent future taxation (you may pull enough to max out the 10 or 12% tax bracket).

✅ Step 4: Utilize Roth IRA and Cash Value Life Insurance to supplement your tax-free income (without affecting your tax bracket)

Roth IRA & Cash Value Life insurance money is completely tax-free and is NOT considered provisional income (for social security’s calculation).

This is the absolute best way to supplement your income in any given year in retirement while not negatively affecting your tax bill in any way.

Use these accounts strategically as needed for additional income which can also allow you to collect social security tax-free as well.

Let’s chat 💬😎