Strategies for Paying Fewer Taxes After Retirement 

After you retire, you no longer have the security of a regular paycheck to buoy your bank account during tight financial times. You must subsist on your pension, Social Security check, and money you have invested in the stock market. 

When you want your cash to last for as long as possible, you understandably want to avoid a big tax bill each year. With that, you can safeguard your money by using these strategies to avoid paying too much in taxes.

Move to a Tax-Friendly State

Your first strategy for saving money during retirement may involve moving to a state that has lower taxes. Several states, most notably Texas, Florida, and Nevada, have no state income taxes at all and only place minimal taxes on consumer goods like alcohol and cigarettes. 

Before you move to a new state to save money on your taxes, you should consider the expenses involved for other necessities like:

• housing utilities
• insurance
• property and sales taxes

If these expenses is considerably higher, they may offset any money that you save paying taxes.

Convert to a Roth IRA

If you have your retirement savings in a traditional IRA or a 401(k), you should consider converting that money to a Roth IRA account. When you put your savings in a Roth, you avoid paying federal taxes on that money.

You will have to pay ordinary income taxes when you first make the conversion. However, once you are in a lower tax bracket during retirement, you will owe fewer federal taxes than you did in previous years. 

You should use the tactic with caution if you are under the age of 65 and buy your health insurance from the ACA marketplace. Converting to a Roth will increase your income, which could lower or eliminate any healthcare subsidy that you receive.

Make Early Withdrawals

If you are already in a lower tax bracket, you can avoid paying IRS-imposed Required Minimum Distributions (RMDs) when you turn 70 ½ by making early withdrawals from your traditional IRA or 401(k) account. These early withdrawals give you money to live on even after you retire.

Also, early withdrawals help you put off withdrawing your Social Security for longer, which can lead to bigger payouts when you do finally start drawing your Social Security payments. Again, this strategy is only effective if you are in a lower federal income tax bracket. If you are in the 15 percent bracket or higher, you will not enjoy any notable tax savings.

Sell Stock

Another strategy you have at your disposal to help you pay less in taxes involves selling stocks. If you are in the 15 percent federal tax income bracket or lower, you can sell stock and still not owe any capital gains taxes.

You should use this tactic if you have stock in your portfolio that you have held for a year or more. You should also sell stock that has appreciated in value. 

It is important that you reevaluate this strategy on a yearly basis. Adjust this tactic accordingly to reflect the current year's tax codes and any fluctuations in your household income.

Get Professional Retirement Saving and Tax Advice

Finally, when you want to know every legal loophole available to you when it comes to lowering your retirement tax burdens, you should rely on a tax professional to help guide you. A tax professional, particularly one who has a background in accounting, will know what tax laws are available to help you lower what you have to pay in federal taxes after you retire.

Also, a tax pro can help you make timely conversions of your savings to tax-advantaged accounts, saving you big money when it comes time to file your returns. You should not wait until you have retired before seeking out this counsel. You should meet with a tax professional as early as you can while you are still working, and at minimum several years before you plan to retire.

Retirement is a time in your life when you should be able to relax and avoid worries about money. You can ease your tax burden and make your retirement savings last longer by using these strategies to owe less in federal taxes each year.