What financial steps are you taking to prepare for retirement?

  • In my late 50s. So still a ways to go. I am learning how to structure my distributions and my retirement money to minimize the taxes I need to pay.

  • Do you have a TAX PRO?

  • I just try to save as much as I can in 401k. Convert to Roth whenever possible.

  • Pay off all installment debt, even if it’s at a lower interest rate than savings are earning. No debt in retirement makes the planning simpler. I’m 8 months from paying off my home and car, and then have about another year after that before I retire, so all of the money I am paying to installment debt can go to savings.

    – Z –

  • Put your money is lots of different buckets so you will have the option of where to withdraw from. Some are “retirement” vehicles, and some are not.

    • Roth 401k (if offered at work) - higher contribution limit than Roth IRA. Later, convert to Roth IRA so it is not subject to RMD

    • Backdoor Roth IRA - if your MAGI disallows you from contributing directly to a Roth IRA. Best if you do not have regular IRA, otherwise you will be taxed on a prorated basis for current convertion.

    • HSA - if you have High Deductible medical plan. Contributions are pre-tax and withdrawals are tax-free if used for medical expenses. Save up all current medical receipts and withdraw later. Unlike an FSA, the HSA is yours forever and NOT use it or lose it annually.

    • i-Bonds - Interest rate changes every 6 months based on inflation, but accrues on a deferred tax basis (not taxed until you redeem), and not subject to state/local income tax.

    • Non-retirement investment account. Long term capital gains, and qualified dividends are currently taxed at a lower rate than ordinary income. It is possible to pay zero federal income tax on qualified dividends.


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