5 Tax Breaks That Help You Prepare for Retirement

Retirement

5 Tax Breaks That Help You Prepare for Retirement

Posted by Infinite Wealth Advisors, LLC
1 year ago | June 10, 2018

Retirement planning isn’t the easiest thing for most people, so it’s no surprise that we begin to worry after age 50 or so. You might fear that you aren’t saving enough, or that your budget won’t be reasonable once you reach retirement.

Those are legitimate concerns (and we can help you address them). But rest assured, these issues are well known, and there are provisions to help retirees, and those soon to retire. For example, these five tax breaks can help you prepare for retirement, and manage your budget once you finally do retire.

Catch-up contributions. You already know that making contributions to a qualified retirement account can help you earn a tax deduction. Not only do you save more for retirement; you save money on your taxes now. After age 50, that deduction increases, so you can contribute an additional 6,000 dollars to a 401(k).

Higher HSA contribution limit. A Health Savings Account allows you to set aside pre-tax money to be used toward qualified medical expenses now, or roll over the money for use in future years. Essentially, you can harness those benefits to save for medical expenses in retirement. After age 55, you can stash an additional 1,000 dollars annually in this account.

Avoid taxes on your RMDs. After age 70 ½ , you are required to take minimum distributions from your retirement account, and also pay income taxes on that money. However, if you find you don’t need some of these funds, there’s no need to pay taxes on them. Rolling over directly to a qualified charity can help you avoid income taxes on up to 100,000 dollars of distributions.

Tax credit. You might be able to claim a tax credit if you or your spouse is age 65 or older, or disabled. This tax credit is based upon income, so not everyone will qualify.

Property tax breaks. Depending upon where you live, you might qualify for a discount or even exemption from property taxes. Inquire with your local property tax office about property tax breaks for retirees.

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