Tax Planning for Retirement

There’s no wrong way to save for retirement, but a R.I.T.E. way exists. R.I.T.E. stands for Retirement Income Taxed Efficiently — a federally trademarked process for planning for taxes in retirement created by Avidian financial and tax advisor, Scott Bishop. The R.I.T.E. plan looks at your current savings account(s) and decides when and how to utilize those “buckets” at opportune times and in the most tax-efficient way possible to create a stream of income during retirement.

Here is a visual that illustrates how your pre-retirement income can be funneled, distributed, and utilized using the R.I.T.E plan.

^{R.I.T.E. infographic on page 16 of the Retirement Survival Guide}

In layman’s terms, this plan is designed to help you maximize your retirement income while minimizing your tax bill and you can learn all about it in our free-to-download Retirement Survival Guide.

Those who are looking to optimize their retirement efforts often find themselves wondering, “where is the safest place to put your retirement money?” Unfortunately, the answer is not so black and white. When planning for taxes in retirement, you need to consider which retirement account is most appropriate for your specific needs. Would you benefit best from a tax-deferred account, like a traditional 401(k) and traditional IRA, where you lower your taxable income and pay taxes later? Or a tax-exempt account, like a Roth IRAs and Roth 401(k)s, where ​​withdrawals are tax-free but you pay taxes upfront?

Your financial advisor can help you to determine which type of tax-efficient retirement savings account would be best for your current financial circumstances and overall goals.

Did you know that charitable donations can be tax-deductible? If you are an individual who loves to give back, you may benefit from qualified charitable donations (QCDs) — a strategy in which you donate a portion of your retirement savings to charitable organizations while reducing your taxable income. This strategy also gives you more control over how and where your money or other types of donations (for example, stocks) are being spent. This can be a great strategy to reduce tax liability if done correctly and responsibly.

Our financial advisors can help you to determine how much of your savings to donate to qualified organizations and charities that will benefit you most.

One reason to prioritize estate planning is to be able to leave your loved ones with enough support that they can be taken care of financially. However, when you neglect retirement tax strategies as a crucial part of your financial plan, you could be hit hard with taxes on your estate, leaving your loved ones with less than you envisioned. You can begin safeguarding your retirement savings and assets for your loved ones by seeing what steps can be taken to reduce your federal estate taxes, including the creation of trusts, marital deductions, gift-giving, and more.

If you want to leave more behind, speak to your financial advisor about effective estate tax planning for your unique circumstances.