Strategies to reduce my tax consequences in retirement
Terry, I think I am in a corner but I will ask. I am 72. spouse is 71. we have 1.1 million in pretax IRA, SS income is 69K annually and a fixed annual pension at $10,500. I am earning some “gig” work at 40 or 50K a year. SO, any tax strategies I might be able to utilize or am I stuck having to pay the 17 – 22% Fed tax every year going forward? I am a little late to the party on this question.
Terry Says
You’re not late — it’s just that there’s not much you can do to avoid taxes these days. The one thing I would suggest is making a $7,000 contribution to an IRA, which will be tax deductible. You can do that because you have earned income from your “gig” work.
Converting part of your IRA at this point would just generate an immediate tax bill — and would likely raise your Medicare Part B premiums for two years, so that doesn’t make sense. Don’t forget that this year you will have to take an RMD from your IRA — do it before year-end so you don’t have to take two of them next year! That will add to your tax bill –and could raise your tax bracket. Do some planning immediately.
Just enjoy what’s left after taxes, and be thankful that you have enough assets and income to pay taxes.
