When planning your retirement, it’s important to think about how federal income taxes will affect your overall financial picture. The good news is that there are plenty of deductions and strategies to help reduce your tax burden — and a financial advisor can guide you every step of the way. Curious where to start? Here are some tips to discuss with your advisor that can make a real difference in lightening your tax load and securing your future.
- Consider Roth contributions to your Eder Retirement Plan. These are after-tax dollars on which your earnings will grow tax-free.
- If you’re 50, you can make extra tax-deferred “catch-up” contributions to your Eder Retirement Plan and your 401K or IRA if you have either. The 2024 catch-up contribution for the Eder plan is $7,500.
- Consider getting a health savings account, which can be used to pay off medical expenses. It will grow with tax-free compound interest over time. Each year you are allowed to deduct contributions to your HSA of $4,150 for yourself or $8,300 for your family. When you pass 55, you are allowed an additional $1,000 annual deduction.
- If you do not itemize your deductions, there is an increase allowed in the standard deduction that is allowed after age 65. Be sure to take it.
- You can deduct up to $5,880 in long-term care insurance premiums after age 70.
- If you have an IRA, you can make a Qualified Charitable Distribution directly from your IRA and treat it as a deduction.
These strategies might seem complicated at first, but with the right guidance from your advisor, they can become powerful tools to help you make the most of your retirement — and enjoy the freedom and opportunities you’ve worked so hard for.
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