Don’t Let Taxes Ruin Your Retirement

June 4, 2006

You know that you should diversify your investments to reduce your investment risk, but did you know you should also diversify your investments for tax purposes?

401K and IRA accounts are taxed at your ordinary income tax rate, so if you’re in the 25% tax bracket when you retire, you’ll pay 25% (plus state income taxes) on every dollar you withdraw from your retirement accounts.

This can really put a dent in your budget, especially in your later retirement years.  To avoid paying taxes on every dollar of income during retirement, why not start investing in Roth IRAs and taxable accounts now, instead of socking all of your money away in tax-deferred retirement accounts?

That way, when you are retired, you can decide which account to pull money out of first to keep your income taxes at a minimum and to make the most out of every retirement dollar.

Resources for furthur discussion on diversifying for tax purposes:

Ask the Expert ~ Taxing Withdrawals
Cut Your Taxes In Retirement –


Leave a Reply


Beacon Financial Advisors, LLC, is a fee-only financial planning and Registered Investment Advisory firm headquartered in Lee’s Summit, Missouri and serving the greater Kansas City area.

The firm offers comprehensive financial planning services. Beacon advisors work solely for their clients. Click here to learn more about our services.

About Us

Kristine McKinley, CFP®, CPA, is the founding principal of Beacon Financial Advisors, LLC, an independent, fee-only financial planning firm located in Lee’s Summit, Missouri and serving the greater Kansas City area.

Kristine focuses on providing fee-only financial planning, investment advice, and tax preparation to individuals and families from all income levels.  About Us

In the News

Investment News – Kristine McKinley discusses the 0% Social Security COLA (for 2016) in No Social Security cost-of-living adjustment in 2016.

Kiplinger Magazine/NAPFA – Kristine McKinley answered reader’s tax questions during the 2013 Jump Start Your Retirement Plan Days sponsored by Kiplinger magazine and the NAPFA Consumer Education Foundation.