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Maximizing Your Retirement Income: A Tax-Efficiency Approach for Central Texans

Updated: Jul 14, 2023


Are you approaching retirement and wondering how to make the most of your income? It's natural to have concerns about how much of your income is spendable versus what goes to pay taxes. After all, the difference between the two is significant.


Today, we'll explore how you can achieve a tax-efficient retirement income plan, including the impact of recent changes in the Tax Cuts and Jobs Act. We'll also discuss three key metrics you should consider when planning for retirement income and five crucial questions to ask your financial advisor.


First, let's look at tax efficiency in retirement income planning. Many people plan to get income from Social Security and pensions and withdraw from their 401k. However, drawing from an IRA can have a significant impact on taxes. For instance, a married couple filing jointly withdrawing $75,000 from their IRA will be left with only $69,500 of spendable income after paying federal income tax.


However, if that same withdrawal were from a Roth or solely from Social Security, they could spend the entire $75,000. Even if it were a blend of Social Security and IRA withdrawals, they'd still have considerably more spendable income than if it was just IRAs.


Optimizing your retirement income plan can help you enjoy more spendable income, reduce the risk of running out of money, and achieve greater peace of mind.


To ensure a secure retirement, it's important to consider three key metrics:


  1. Portfolio longevity: Evaluate whether your portfolio will last through your retirement, providing you with a reliable and sustainable source of income.

  2. Monthly income needs: Consider the amount of your monthly income needs that your income streams, such as Social Security and pensions, will meet.

  3. Estate value: Ensure you leave behind an after-tax estate that aligns with your legacy goals.


By considering these three metrics, you can better judge the effectiveness of your income strategies and ensure that your retirement plan aligns with your financial goals.


Timing is another crucial factor when it comes to retirement income planning. The timing of decisions, such as when to start taking Social Security or signing up for Medicare, can significantly affect your retirement value. Our team has put together a list of five crucial retirement income questions to ask your financial advisor, including:


  1. When should I claim my Social Security benefits?

  2. When should I sign up for Medicare?

  3. When should I buy long-term care insurance?

  4. How can I make my savings last the rest of my life?

  5. Which account should I draw from and when?


Working with a financial professional can help you understand the impact of different planning options and identify your optimal strategy. Morris and Pursley Financial Plans specializes in retirement income planning for Central Texans. Our team of financial professionals can help you navigate these considerations and provide guidance to help you plan for a comfortable retirement.


Don't leave your hard-earned money on the table. Contact us today to develop a custom retirement income strategy that works in your best interest and helps you meet your retirement goals.


Disclosure: The information provided in this blog post is for educational purposes only and should not be considered as personalized financial advice. As an RICP (Retirement Income Certified Professional) financial advisor, I am sharing general knowledge and insights based on my professional expertise. The strategies and concepts discussed may not be suitable for everyone, and individual circumstances should be taken into consideration. It is recommended to consult with a qualified financial professional before making any financial decisions. I am not affiliated with any specific financial institution or company mentioned in this article. This blog post is not an endorsement or recommendation of any specific financial products or services. The content provided is accurate to the best of my knowledge at the time of writing, but it may not reflect the most current regulations or developments in the financial industry. Please consult with a professional advisor for up-to-date and personalized advice tailored to your individual financial goals and circumstances.

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