Grow Your Retirement Savings with Tax-Free Investments

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A Tax-Free Investment Advisor You Can Trust

At Secure Retirement Strategies, we always encourage our clients to look beyond the typical retirement investment options, such as traditional IRAs and 401(k)s. We know that might sound strange, but when it comes to strategically planning for your future, tax-free retirement income is where it’s at.

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How Is Retirement Income Taxed?

For retirees, having a steady cash flow is an absolute necessity in retirement. But, what many retirees do not realize is how quickly taxes can eat away at their hard-earned income streams. To give you a better idea of how retirement income is taxed, let’s take a closer look at some of the most popular taxable retirement options:

Social Security

More than 60% of Americans who are 65 years old or older receive 50% of their retirement income from Social Security. To the surprise and dismay of many Social Security beneficiaries, depending on their circumstances, up to 85% of their Social Security benefits are taxable. In December 2015, The Social Security Administration reported that around one-third of those collecting Social Security pay Federal Taxes on their benefits.

Traditional IRAs

One of the most significant differences between a traditional IRA and a Roth IRA occurs when retirees want to withdraw their savings. Unlike a Roth IRA, traditional IRAs require retirees to begin taking required minimum distributions (RMDs). These withdrawals are taxable and mandatory for all retirees aged 70.5 and up who hold a traditional IRA account. A Roth IRA has no required minimum distribution and all growth and income distributions are tax-free.

401(k)s

Similarly to a traditional IRA, when a person reaches the age of 70.5, they must begin taking required minimum distributions from their 401(k) unless they are still working for that company. The withdrawals are taxed at the retiree’s regular income tax rate. Like a traditional IRA, when the account holder dies, their heirs will owe income taxes on any money left in the account.

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What Is Tax-Free Retirement Income?

It may be hard to believe, but there are many ways for you to save and earn income during your retirement without paying taxes, and guess what? They’re all legal! As we mentioned previously, as experienced financial advisors, we encourage our clients to take advantage of tax-free retirement income options because we know that there are easy ways for clients to save for the future without giving Uncle Sam most of their hard-earned cash.

Here are a few popular tax-free income options to consider for your retirement:

Roth IRAs

Thankfully, Roth IRAs do not require withdrawals during the owner’s lifetime. Roth IRAs are often considered the ideal legacy planning vehicle because they grow tax-free income throughout your lifetime that can be passed down to your heirs, where they continue to be tax-free.

Indexed Universal Life Insurance

Often overlooked as a viable retirement income source, tax-free life insurance is not just for those you leave behind. Tax-free life insurance is ideal for clients looking to avoid a hefty tax bill while still building wealth. An indexed universal life insurance policy can provide tax-free growth for your money, a death benefit to protect your family, long-term care benefits, and a retirement income stream. All of those benefits are tax-free!

Using tax-free income streams first could limit the need for retirees to tap into taxable retirement income in order to cover expenses.

Is It Too Late to Create a Tax-Free Retirement Plan?

The path to tax-free retirement income starts right now. Your future self will thank you for every moment you spend crafting your retirement strategy today. With proper planning, you can drastically reduce your taxable income during retirement, and the sooner you begin, the more powerful your tax benefits become. Local taxes, state and local taxes, and federal taxes can take a significant bite out of your retirement savings, but starting your tax-advantaged retirement accounts now puts time on your side.

Time serves as your greatest ally in building substantial retirement savings. When you initiate tax-free investment strategies early, your money grows without the burden of yearly tax obligations. A Roth IRA tax-free account or Roth 401(k) lets your investments compound exponentially over decades. Think of it this way — every dollar you invest now could potentially grow into multiple tax-free dollars by retirement. Your retirement account options provide numerous pathways to begin your tax-free journey, regardless of your current age or financial situation.

Contact Secure Retirement Strategies today to get started!

The Power of Tax-Free Growth and Why It Matters More Than You Think

Tax-free retirement is an achievable goal for residents across our service areas. Your hard-earned money deserves protection from unnecessary taxation, and tax-free growth delivers remarkable long-term advantages for your retirement savings. But why does tax-free growth matter so significantly? And what can it bring to you? We'll take a look.

Compound Growth Without Tax Drag

When your investment strategy includes tax-advantaged retirement accounts, your money grows unimpeded by annual tax obligations. Every dollar of interest income and capital gains stays invested, potentially generating additional returns year after year.

Protection from Future Tax Rate Increases

Tax-free retirement accounts shield you from potential increases in federal taxes and state and local taxes. While no one can predict future tax rates, tax-free income streams provide valuable financial security during retirement.

Greater Control Over Retirement Income

Tax-free accounts give you more flexibility in managing your retirement distributions. You won't need to worry about pushing yourself into a higher tax bracket when withdrawing from these accounts, making retirement planning more straightforward.

Maximized Legacy Planning

Tax-free retirement accounts often offer superior estate-planning benefits. Your beneficiaries can inherit your tax-free assets without facing substantial tax burdens, preserving more of your legacy for future generations.

Tax-Free Retirement Planning for High-Income Earners

High-income earners face unique challenges in retirement planning, but numerous opportunities exist to create substantial tax-free retirement income. Traditional retirement accounts might seem like the obvious choice, but consider how withdrawals from these accounts could affect your tax situation in retirement. For example, a high-income professional who accumulates $2 million in traditional retirement accounts might face significant tax obligations when required minimum distributions begin.

Strategic use of Roth IRA tax-free accounts and Roth 401k options can dramatically reduce your future tax burden. While high earners may face income limitations for direct Roth IRA contributions, several advanced strategies remain available. Roth conversions and Roth strategies allow high-income individuals to build substantial tax-free retirement savings despite earning above standard contribution limits.

Consider this: A high-income couple earning $400,000 annually might pay over 35% in combined federal taxes and state and local taxes during retirement if relying solely on traditional retirement accounts. By incorporating tax-free investment strategies early, they could potentially save hundreds of thousands in retirement taxes. Tax-advantaged retirement accounts become particularly valuable when you factor in potential changes to capital gains rates and limitations on itemized deductions that often impact high-income retirees.

Build Your Future Today with Secure Retirement Strategies

Whether you want to explore the benefits of a life insurance retirement plan, annuity, or Roth IRA, our team of professional advisors can help you select the best tax-free long-term care investments for your retirement. Contact us today, and we’ll put you on the path to a bright financial future.

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