Managing Income for Tax Benefits in Retirement

I've learned that income planning is even more important in retirement than when working.  The simple reason is that taxable income may be controllable by the retiree to maximize tax benefits and minimize tax liability.  When working, most of taxable income usually comes from a regular paycheck which limits the options for minimizing tax liability.

 

During my working years, I only had a few options to manage income.  Specifically, whether to make tax deferred contributions to retirement accounts and whether to take capital gains from stocks in taxable accounts.

Now that I'm retired, I no longer have working income.  Instead, I have Social Security, Dividends and Interest, and Capital Gains.   Social Security is tax free below a certain income and up to 85% can be taxed above a certain income.    Dividends and Capital Gains can be tax free depending on adjusted grosss income (AGI).  Several tax credits are phased out above AGI thresholds. Federal tax free interests is now more important keep below AGI thresholds. Also, premiums for Medicare are dependent on one's income. Higher incomes may incur higher premiums.

I didn't expect managing tax benefits would increase in importance in retirement.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial, tax nor retirement advice. Please consult a professional advisor.

Copyright © 2026 Achievement Catalyst, LLC