How to manage taxable income during retirement

May 12, 2014 @ 12:00 am

Runtime: 2:20

Estate planning attorney Natalie B. Choate details strategies advisers need to utilize to help their clients manage the flow of their taxable income during retirement.

Video Transcript

[MUSIC] We find that, the big strategy problem is constructing income that's gonna last throughout retirement. Now, my little angle on that is, I'm not an investment advisor. I'm not gonna tell you to buy stocks or bonds. But I am working with a very tax-sensitive asset, your IRA. And when you take money out of that, or when you make a conversion to a Roth IRA, which can generate tax free income, these are, things that can really make a big difference for a retiree in retirement. For example, you often hear in a magazine article that you should manage your income and, and, and control the flow of how much taxable income you get in a year. Well most people can't do that. You, you got a salary, you, you can't just stop it. But retirees, if you have an IRA and a Roth IRA and other assets, you've got a hot and cold water faucet. And if you want more taxable income because maybe you're in a really low tax bracket this year, you can take more money out of the traditional IRA, or maybe if you need some more money, and you don' t wanna pay more taxes cuz you've already got too much taxable income, you can take money out of the Roth IRA. So retirees are, are able to control the flow of taxable income much more than the rest of us. Advisers, need to make client's aware of this because the client, may have a natural inclination to just, never pay taxes before you have to. Whereas, for in some cases, it would be a good idea to accelerate a little income through a Roth conversion or something like that. And the adviser's if you look at at my book or any of the, like this lecture today, there's gonna be like 25, 30, 100 different tiny tax rules. And if you're aware of that rule, and you know that it, your client can take advantage of it, not everybody can, but your client can, you can save him some dollars. So it's a tax sensitive asset, and and the IRS is gonna use these rules against your client. So, you might as well be aware of the rules and use them to help your client if, if it, if you can. [MUSIC]


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