Have a tip for the newsroom, press release, local event listing or digital content to share? Send it here. Support our mission by visiting patreon.com/fl1 and becoming a monthly subscriber.
It’s always good to look ahead when it comes to finances, and that includes looking as far as retirement.
One major thing you should look into is how to keep more money when it’s time to pay taxes during your retirement years.
There are over 50 million seniors living in the U.S., and most are surviving on a fixed income.
Related: Social Security COLA increase just weeks away, millions of couples will see $2,753 payments
What you choose to do now can impact what you’re able to do years down the road.
Here are two things that could cut down taxes owed when you’re in retirement
You can open a Roth 401k or Roth IRA.
These accounts let you withdraw funds tax free as long as your account is open for 5 years before you start withdrawing money.
If you take money out before age 59.5 you’ll face 10% withdrawal fees.
For a Roth IRA you don’t need an employer to hold an account.
With a Roth 401k you need an employer, and normally an employer will match your contributions.
While there are tax-free withdrawals, there is no deduction for the year you contribute to the account.
Another thing that can influence the taxes on your benefits come retirement is relocate.
Related: 4 things to do so you don’t need to work while claiming Social Security
Each state has different rules when it comes to taxes, and 37 of them do not have state tax on Social Security benefits.
Make sure you pay attention to property taxes, sales tax, and taxes on investments or pensions.
While no taxes on your Social Security benefits might be a good thing, you need to be sure it balances out.
Get the latest headlines delivered to your inbox each morning? Sign up for our Morning Edition to start your day. FL1 on the Go! Download the free FingerLakes1.com App for Android (All Android Devices) or iOS (iPhone, iPad).