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Tax Minimization Strategies

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When you have a full-time job, paying taxes is just a fact of life. Although your tax liability will most likely change quite a bit once you retire, rising taxes are often still a concern for many individuals who are approaching the age of retirement.

If you're about to retire, incorporating tax planning into your financial decision-making now could help you save money in the future.

Here's a look at some strategies you can use to help with your retirement planning and minimize your taxes after you retire.

Purchase a Tax-Deferred Vehicle

Purchasing or investing in a tax-deferred vehicle, such as a 401(k) or an IRA, means your money can compound interest for years, free from income taxes, potentially allowing it to earn interest at a faster rate.

Keep in mind, however, that there are few financial vehicles that will allow you to avoid paying taxes altogether. As an example, insurance products only allow you to defer paying them until retirement, which is when most people are typically in a lower tax bracket.

Work Now to Reduce Your Living Expenses

You may wonder how reducing your expenses before you retire could help minimize your taxes, but the answer is really quite simple. If you don't need to spend a lot of money each month after you retire, you won't have to withdraw as much money from your retirement accounts.

If you can keep your expenses down, you can stay in a lower tax bracket and get a better tax break. This can also help your money go further, in case you have unexpected medical or other expenses as you get older.

Pay Off Your Home Mortgage Before You Retire

In most cases, the mortgage payment is the biggest monthly bill families have to pay.

If you have not paid off your mortgage by the time you retire, you will need to withdraw a larger amount from your retirement each month to pay your mortgage.

This not only makes it more difficult to minimize the amount of tax you will pay, but takes away from the amount of money you have worked so hard to save for your retirement.

Determine If You Are Eligible for a Reduction in Your Local Property Taxes

The amount of income tax you will pay may become lower when you retire, but in some cases, you may discover that your property tax is equal to or even exceeds the amount of your income tax.

Fortunately, many municipal taxing agencies offer discounts once you reach a certain age. Check to see if you are eligible for these discounts, and apply for them as soon as you can.

Diversify Your Retirement Portfolio

There are some restrictions on how much money you can contribute to a 401(k), an IRA and other types of retirement vehicles, but there is nothing that says you can't diversify your retirement portfolio. In fact, it is actually important that you do. Retirees can and are encouraged to have income coming in from multiple sources, including Social Security, property rentals, taxable brokerage accounts, bonds, savings accounts and more.

Keep in mind that different income vehicles are taxed differently, so you may have vehicles that are fully taxed, partially taxed, not taxed at all or taxed at a long-term capital gains rate. By understanding how each income is taxed, you can give yourself more options to invest while you are working yet still create a winning tax minimization strategy for your retirement planning.

Are you ready to retire, but have concerns or questions about your financial future? Roth Wealth Advisors can help you reach that abundant retirement you want and deserve. Contact us via email here or call 614.310.4519 to schedule an appointment today!


Please note that withdrawals will reduce the contract value and the value of any protection benefits. Additional withdrawals taken within the contract withdrawal charge schedule will be subject to a withdrawal charge. All withdrawals are subject to ordinary income tax and, if taken prior to age 59½, may be subject to a 10 percent additional federal tax.


To schedule a time to discuss your financial future for that abundant retirement you want and deserve, contact us at Dominique@rosswealthadvisors.com or call us at 614.545.0277 today!

By contacting us, you may be offered information regarding the purchase of insurance and investment products.

Your investment advisor is not permitted to offer, and no statement contained herein shall constitute tax or legal advice. You should consult a legal or tax professional on any such matters.

All written content on this site is for information purposes only. Opinions expressed herein are solely those of ROSS WEALTH ADVISORS and our editorial staff. Material presented is believed to be from reliable sources; however, we make no representations as to its accuracy or completeness.
All information and ideas should be discussed in detail with your individual adviser prior to implementation. Fee-based financial planning and investment advisory services are offered by TOUNJIAN ADVISORY GROUP, LLC, a Registered Investment Advisor in the State of Florida. Insurance products and services are offered through ROSS WEALTH ADVISORS, and TOUNJIAN ADVISORY GROUP, LLC are unaffiliated companies. The presence of this web site shall in no way be construed or interpreted as a solicitation to sell or offer to sell investment advisory services to any residents of any State other than the State of Ohio or where otherwise legally permitted.

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