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Retirement planning is about more than just having enough money; it’s about designing the life you want with purpose and intention. A major part of that design is ensuring the wealth you’ve created can support your goals and your legacy without being eroded by unnecessary taxes. For high-income earners, this requires a forward-thinking approach that integrates every part of your financial world, from investment location to charitable giving and estate planning. This guide will show you how to reduce taxes in retirement for high income earners by building a cohesive strategy that gives you more control, flexibility, and confidence, allowing you to protect your assets and live your version of an intentional life.
You’ve spent your career building a substantial nest egg. The common assumption is that financial worries shrink in retirement, but for high-income earners, a new challenge appears: protecting that wealth from taxes. The strategies that helped you accumulate wealth may not be the same ones that help you preserve it. Your retirement income from sources like 401(k)s, IRAs, and pensions is often taxable, and a high income can push you into brackets and surcharges you might not expect. Understanding these tax hurdles is the first step toward creating a plan that lets you keep more of your hard-earned money. Let's break down the three main tax challenges you're likely to encounter.
One of the biggest surprises for successful retirees is how much of their income can be lost to taxes. Withdrawals from traditional retirement accounts like 401(k)s and IRAs are taxed as ordinary income. If your retirement income is high, you could easily find yourself in the top federal tax brackets. For example, the top marginal rate is 37% for individuals with taxable income over $539,900 and married couples over $693,750, according to recent federal income tax rates. This means a large portion of every dollar you withdraw above that threshold goes directly to the IRS, significantly reducing your net income.
On top of regular income taxes, you may also face extra surcharges. The Net Investment Income Tax (NIIT) is a 3.8% tax on investment income for individuals earning above $200,000 ($250,000 for married couples). Additionally, a 0.9% Medicare surcharge applies to earned income above those same thresholds. What many retirees don't realize is that distributions from pre-tax retirement plans can increase your modified adjusted gross income (MAGI), pushing you over the limit and triggering these taxes. Understanding what taxes you pay in retirement is crucial, as these surcharges can add up quickly. Proactive planning can help you manage your income to stay below these thresholds when possible.
The Alternative Minimum Tax (AMT) adds another layer of complexity. Think of it as a parallel tax system designed to ensure high-income taxpayers pay a minimum amount of tax. You must calculate your taxes twice: once under the regular rules and once under the AMT rules, then pay whichever is higher. For retirees, certain income types or large deductions can trigger the Alternative Minimum Tax, creating an unexpected tax bill. Being aware of this complicated rule is essential for accurate retirement income planning.
Once you enter retirement, the focus shifts from accumulating wealth to distributing it. How you take money out of your accounts is just as critical as how you put it in, especially when it comes to taxes. For high-income earners, a poorly planned withdrawal strategy can lead to unnecessarily high tax bills, chipping away at the nest egg you worked so hard to build. The key is to understand how your different accounts are taxed and to create a plan that gives you control over your annual income.
You likely have a mix of accounts: taxable (like a brokerage account), tax-deferred (like a Traditional IRA or 401(k)), and tax-free (like a Roth IRA). This mix isn't a complication; it's an opportunity. By strategically pulling from each, you can manage your taxable income, stay in lower tax brackets, and preserve more of your wealth for the long run. There is no single "best" way to do this. The right approach depends on your income needs, the size of your accounts, and your long-term goals for your estate. Being intentional with your withdrawals is one of the most powerful ways to build and protect your wealth throughout your retirement.
A common piece of advice is to withdraw from your accounts in a specific order: taxable accounts first, then tax-deferred accounts, and finally, tax-free Roth accounts. The logic is simple: this sequence allows your tax-advantaged accounts (especially Roths) to grow for as long as possible without being depleted. For many people, this is a sound strategy. It can be an effective way to reduce taxes on your withdrawals in the early years of retirement.
However, for high-income earners with significant balances in tax-deferred accounts, this approach can create a tax problem later on. Delaying withdrawals from your Traditional IRAs and 401(k)s means those accounts will likely grow to a very large size. When you are eventually forced to take Required Minimum Distributions (RMDs), the amounts could be substantial enough to push you into the highest tax brackets, triggering higher taxes on your Social Security and larger Medicare premiums.
Instead of draining one account at a time, consider a proportional or blended withdrawal strategy. This approach involves taking a portion of your annual income from different account types each year. For example, you might withdraw a specific amount from your Traditional IRA to fill up the lower tax brackets, then supplement the rest of your income needs with tax-free withdrawals from your Roth IRA and distributions from your taxable brokerage account.
This method gives you incredible flexibility and control over your annual tax bill. By blending your income sources, you can effectively set your own taxable income each year. This helps you avoid an income spike that could push you into a higher bracket. A proportional strategy allows you to spread out your taxable income over many years, smoothing out your tax liability and helping you keep more of your money working for you instead of sending it to the IRS.
"Bracket creep" happens when your income rises just enough to push you into a higher marginal tax bracket, causing you to pay a higher rate on that next dollar of income. A primary goal in retirement tax planning is to smooth your income to avoid this. Be mindful of large, one-time financial events, like selling a business or a highly appreciated investment, as they can create a significant tax liability in a single year.
If you anticipate that your future RMDs will be large, you might consider taking distributions from your tax-deferred accounts before you’re required to. By strategically withdrawing funds in your 60s, you can spread the tax impact over more years at potentially lower rates. This is also why building assets outside of traditional retirement accounts is so powerful. A properly designed cash value life insurance policy, for instance, can provide a source of tax-advantaged income without RMDs, giving you another tool to manage your taxable income.
A Roth conversion is the process of moving funds from a tax-deferred retirement account, like a traditional IRA or 401(k), into a tax-free Roth IRA. It’s a simple concept with a powerful trade-off: you voluntarily pay income taxes on the money now, and in return, that money can grow and be withdrawn in retirement completely tax-free. For high-income earners, this is a strategic way to manage one of the biggest unknowns in retirement planning, which is the direction of future tax rates.
If you believe your income will stay high in retirement or that federal tax rates are likely to rise, a Roth conversion allows you to lock in today's rates. Instead of waiting and letting the IRS decide your tax bill decades from now, you take control and settle the tax liability on your own terms. This isn't a strategy to take lightly, as it comes with an immediate tax cost. However, when executed correctly, it can create a significant source of tax-free income, giving you more flexibility and certainty in your financial future. It’s a proactive step that aligns with an intentional living philosophy, helping you design the retirement you want.
When your money sits in a traditional 401(k) or IRA, you have a silent partner in your account: the IRS. Since you haven't paid taxes on that money yet, the government will claim its share when you eventually take withdrawals, at whatever income tax rates exist at that time. A Roth conversion is your opportunity to buy out that partner. By paying the taxes on the converted amount today, you ensure that all future growth and withdrawals from that account are 100% yours, completely free from federal income tax. This is particularly valuable if you anticipate being in a high tax bracket during retirement. It provides tax diversification, giving you a bucket of money that isn't subject to the whims of future tax policy.
Because a Roth conversion adds to your taxable income, timing is critical to keeping the tax cost as low as possible. The ideal time to convert is in a year when your income is temporarily lower than you expect it to be in the future. For many people, a strategic window opens up in the years between their retirement date and the start of Required Minimum Distributions (RMDs). During this period, your income from a salary is gone, potentially placing you in a lower tax bracket and making the conversion more affordable. You could also convert during a year with unusually high business deductions or losses. You don’t have to convert everything at once; many people use a multi-year strategy, converting smaller amounts annually to manage the tax hit.
Before you pull the trigger on a conversion, you need to know the rules of the road. The most important rule is that the entire amount you convert is added to your ordinary income for that year. A large conversion can easily push you into a higher tax bracket, so careful planning with a financial professional is essential. Second, be aware of the five-year rule. Each conversion has its own five-year clock; if you are under age 59.5, you must wait five years to withdraw the converted principal to avoid a 10% penalty. A major benefit, especially for estate planning, is that Roth IRAs have no RMDs for the original owner. This allows you to let the funds grow tax-free for your entire life, creating an efficient way to build a financial legacy for your heirs.
After years of diligently saving in tax-deferred accounts like your 401(k) or traditional IRA, the government eventually requires you to start taking money out. These withdrawals, known as Required Minimum Distributions (RMDs), are not optional. They represent a significant tax event in retirement, especially for high-income earners. Since RMDs are taxed as ordinary income, they can easily push you into a higher tax bracket and even trigger additional costs like Medicare surcharges.
Failing to plan for RMDs is a common mistake that can unnecessarily shrink your nest egg. However, with a bit of foresight, you can implement strategies to manage these distributions and minimize their tax impact. Instead of simply reacting when the RMD deadline arrives, you can proactively decide how to handle these funds. The goal is to satisfy the requirement while keeping as much of your wealth as possible. From strategic charitable giving to deferring income with specialized financial tools, you have several options to maintain control over your financial future and live intentionally.
Required Minimum Distributions (RMDs) are withdrawals you must take from most of your retirement accounts once you reach a certain age. For most accounts, like traditional IRAs and 401(k)s, RMDs usually start at age 73 (or 75 for those turning 74 after 2032). Roth IRAs are a notable exception and do not have RMDs for the original owner.
The government mandates these withdrawals because your contributions and earnings grew tax-deferred for decades. Now, it’s time for them to collect the taxes. These RMDs can increase your taxable income significantly because they are taxed at your ordinary income tax rate. For high earners, this can be a substantial financial hit. It’s crucial to take the correct amount, as the penalty for failing to do so is steep. You can find the specific RMD rules on the IRS website.
If you are charitably inclined, a Qualified Charitable Distribution (QCD) is one of the most effective ways to manage your RMD. If you are 70½ or older, you can send money directly from your IRA to a qualified charity. This distribution counts toward your RMD for the year but is not included in your taxable income.
This strategy provides a powerful one-two punch. First, you fulfill your RMD obligation. Second, because the money goes straight to the charity and never hits your bank account, it doesn't raise your adjusted gross income (AGI). This can help you stay in a lower tax bracket and avoid other income-based costs. As an added benefit, a QCD helps lower your IRA balance, which can lead to smaller RMDs in future years.
A Qualified Longevity Annuity Contract (QLAC) is another tool you can use to manage your RMDs. With this strategy, you can use a portion of the funds from your retirement account to purchase a QLAC. This is a special type of deferred annuity that allows you to delay receiving income from that money until as late as age 85, which is well past the current RMD age.
By moving money from your IRA into a QLAC, you reduce your IRA’s account balance. Since your RMD is calculated based on that balance, a lower balance means a smaller required withdrawal and a lower tax bill today. There are limits to how much you can invest in a QLAC (currently the lesser of 25% of your account balance or $200,000), but it can be an effective way to defer a portion of your RMDs and plan for income later in life.
Beyond choosing the right withdrawal sequence, you can actively manage your investment portfolio to create a more tax-efficient retirement. Two powerful strategies for this are tax-loss harvesting and smart asset location. Think of these as the behind-the-scenes work that makes your entire financial plan run more smoothly. It’s not just about what you own, but where you own it and how you handle the inevitable ups and downs of the market. By being strategic, you can turn investment losses into tax savings and arrange your accounts to minimize the government’s cut over the long term.
This approach requires a shift in mindset from simply picking investments to designing a cohesive system. It’s about being intentional with every dollar. When you pair tax-loss harvesting with a thoughtful asset location strategy, you create more control over your annual tax liability. This gives you the flexibility to pull income from different sources without accidentally pushing yourself into a higher tax bracket. These tactics are especially effective for high-income earners who have assets spread across taxable brokerage accounts, tax-deferred IRAs, and tax-free Roth accounts. By coordinating these accounts, you can fine-tune your income stream and keep more of your hard-earned money working for you, not for the IRS.
Tax-loss harvesting sounds complex, but the idea is straightforward: you strategically sell investments that have lost value. This action creates a capital loss, which can be a valuable tool for reducing your tax bill. You can use these losses to cancel out capital gains you may have realized from selling profitable investments. If your losses are greater than your gains, you can use up to $3,000 of the excess loss to lower your regular taxable income each year. Any remaining losses can be carried forward to offset gains or income in future years, giving you a lasting benefit. This is a smart way to find a silver lining when some of your investments are down.
Asset location is the practice of placing different types of investments in the accounts that offer the best tax treatment for them. The goal is to shelter your least tax-efficient assets while letting your most tax-efficient ones grow. For example, assets that generate a lot of taxable income each year, like corporate bonds, are often best held in a tax-deferred account like a traditional IRA. Inside that account, the income isn't taxed until you withdraw it. On the other hand, assets with high growth potential that you plan to hold for a long time, like stocks, can be a good fit for a taxable brokerage account where you can benefit from lower long-term capital gains rates when you eventually sell.
You can combine tax-loss harvesting with a proportional withdrawal strategy to gain even more control over your retirement income. Instead of pulling all your funds from one account, you can take smaller amounts from your taxable, tax-deferred, and tax-free accounts. For instance, you might sell a losing stock in your taxable account to harvest a loss. That loss can then offset the taxable income created by a withdrawal from your traditional IRA. This coordination allows you to generate the cash flow you need while minimizing, or even eliminating, the associated tax hit for that year. It’s a sophisticated way to build wealth by turning market volatility and tax rules to your advantage.
When you think of life insurance, you probably think of the death benefit, a safety net for your loved ones. While that’s a crucial component, it’s only one part of the story. For high-income earners, a properly structured
This isn't your average term policy. We're talking about high-cash-value whole life insurance, designed to do more than just sit there. It becomes a personal source of capital that you control, offering flexibility and financial confidence when you need it most. By integrating it into your retirement strategy, you can create a stream of income that doesn't add to your tax burden, ensure your legacy is passed on efficiently, and use your money in multiple places at once. Let’s look at how you can put this strategy to work.
One of the biggest challenges in retirement is generating income without triggering a massive tax bill. This is where cash value life insurance shines. As you pay premiums on a whole life policy, a portion of that money builds up as cash value, growing in a tax-deferred environment. When you need funds in retirement, you can access this cash value through policy loans.
Because these are loans against your policy, not withdrawals from an investment account, the money you receive is generally not considered taxable income. This allows you to supplement your retirement income from other sources, like a 401(k) or IRA, without pushing yourself into a higher tax bracket. It’s a way to create your own private pension, giving you a tax-advantaged income stream you can rely on.
If you’ve built a significant estate, you’re likely thinking about how to pass it on to your heirs as efficiently as possible. Estate taxes can take a substantial bite out of the legacy you leave behind. Life insurance offers a straightforward solution. By placing your policy inside an Irrevocable Life Insurance Trust (ILIT), you can remove the death benefit from your taxable estate.
Here’s how it works: the trust owns the policy, not you. When you pass away, the death benefit is paid directly to the trust, which then distributes the funds to your beneficiaries according to your instructions. Because the payout isn't part of your estate, it isn't subject to estate taxes. This strategy ensures your loved ones receive the full, tax-free benefit, preserving the wealth you worked so hard to build.
Beyond providing income and protecting your estate, life insurance can be an active part of your wealth-creation strategy. This is the core idea behind what we call The And Asset®. Instead of letting your money sit in one place, you use a specially designed whole life policy to make it work for you in two ways at once. Your cash value grows, and you can use it as collateral to take out a loan.
You can then use that loan to invest in other opportunities, like real estate, your business, or other assets, all while your policy's cash value continues to compound. It’s a way to become your own source of financing, creating opportunities without having to sell off other investments. This approach transforms your life insurance from a simple expense into a dynamic financial engine that helps you intentionally build wealth over the long term.
Healthcare is one of the biggest and most unpredictable expenses in retirement. A Health Savings Account (HSA) is a powerful tool that can help you prepare for these costs while also significantly reducing your tax burden. When used correctly, an HSA acts as a dedicated, tax-advantaged investment account specifically for your future medical needs. For high-income earners, it’s a strategic piece of the retirement puzzle that offers benefits you can’t find in any other account. Think of it as a personal healthcare fund that the government gives you three separate tax breaks for using.
This isn't just about saving; it's about strategically building a separate pool of capital that is insulated from taxes. By intentionally funding an HSA, you take control of future healthcare costs rather than leaving them to chance. This aligns perfectly with creating a financial life built on certainty and purpose. The real power of an HSA comes from understanding how to use it not just for today's co-pays, but as a long-term investment vehicle that can grow into a substantial asset by the time you retire. Let's break down how you can put this account to work for you.
The main reason HSAs are so effective is their unique triple tax advantage. It’s a combination of benefits that makes this account a standout for tax planning. First, your contributions are tax-deductible. This means the money you put into your HSA each year lowers your current taxable income, giving you an immediate tax break. Second, the money in your account grows tax-free. You can invest your HSA funds, and any earnings from those investments compound without being taxed. Finally, when you withdraw money to pay for qualified medical expenses, those withdrawals are completely tax-free. This three-part benefit allows you to save for healthcare in the most efficient way possible, protecting your wealth from both taxes and future medical costs.
As a high-income earner, you need to be aware of Medicare surcharges in retirement. The Income-Related Monthly Adjustment Amount (IRMAA) is an extra premium added to your Medicare Part B and Part D costs if your income exceeds certain thresholds. Withdrawals from traditional 401(k)s and IRAs count as income and can easily push you into a higher bracket, triggering these surcharges. This is where your HSA becomes a strategic tool. Because withdrawals for qualified medical expenses are tax-free, they don’t increase your modified adjusted gross income (MAGI). By paying for your healthcare costs directly from your HSA, you can keep your taxable income lower and potentially avoid these costly surcharges, preserving more of your retirement funds for your other goals.
To get the most out of your HSA, it’s best to treat it as a long-term investment account, not just a savings account for immediate medical bills. While you are working and eligible, focus on contributing the maximum amount allowed each year. If you can afford to, pay for your current medical expenses with after-tax dollars instead of tapping your HSA. This allows the funds in your account to remain invested and compound tax-free for decades. By incorporating an HSA into your retirement strategy this way, you build a substantial, dedicated fund for healthcare in retirement. This approach aligns with the principle of using different assets for different jobs, which is a core part of our philosophy at the BetterWealth Learning Center.
Giving back is a core part of an intentional life. But strategic giving is about more than writing a check; it’s structuring your donations to maximize your impact and your tax savings. For high-income earners in retirement, charitable giving can be a powerful tool for reducing taxable income. Instead of donating cash, you can use specific strategies that look at what you give and when you give it. This approach aligns your financial goals with your personal values, creating a win-win for you and the causes you care about.
One of the most effective ways to give is by donating appreciated assets, like stocks or real estate that have grown in value. When you donate these assets directly, you get a double tax benefit: you avoid paying capital gains taxes and can still take a charitable deduction for the asset’s full market value. For example, if you own stock worth $50,000 that you bought for $10,000, you’d normally owe tax on the $40,000 profit. By donating the stock instead, you skip that tax bill entirely.
A Charitable Remainder Trust (CRT) blends philanthropy with retirement income. You transfer assets into an irrevocable trust, which then pays you an income stream for a set period. When the trust term ends, the remaining assets go to your chosen charity. You get an immediate partial tax deduction when you fund the trust, which is great for a high-income year. Plus, the trust can sell an appreciated asset without triggering immediate capital gains tax. A Charitable Remainder Trust is a powerful way to create reliable income while establishing a meaningful legacy.
Timing is everything with charitable giving. A tax deduction is more valuable in a higher tax bracket, so it makes sense to time your donations for years when your income is highest. This strategy, often called "bunching," involves concentrating several years' of donations into one tax year. This helps you exceed the standard deduction so you can itemize and get a larger tax break. By planning your donations around income spikes, you make your contributions work harder for you and the causes you support.
A solid retirement tax plan isn't just about the strategies you use; it's also about the pitfalls you avoid. For high-income earners, a few common assumptions can derail years of careful saving. Understanding these mistakes is the first step toward building a more resilient financial future. By sidestepping these errors, you can keep your plan on track and protect the wealth you've worked so hard to build. Let's look at three of the most frequent and costly mistakes.
Many people assume their tax rate will automatically drop after they stop working, but for successful individuals, the opposite is often true. If you've spent decades saving in tax-deferred accounts like 401(k)s and traditional IRAs, you've built up a significant future tax liability. Every dollar you withdraw is taxed as ordinary income. When you add in other income from pensions or investments, you could easily find yourself in the same tax bracket as your peak earning years. True intentional living in retirement requires planning for this reality, not hoping for a lower tax bill.
Where you live and when you take your money matters. State tax laws on retirement income vary dramatically; some states have no income tax, while others tax everything from pensions to IRA withdrawals. Moving to a more tax-friendly state is a powerful strategy, but it requires careful planning. Beyond geography, the timing of your withdrawals is critical. Taking a large, one-time withdrawal could push you into a higher tax bracket for the year, triggering higher taxes and potential Medicare surcharges. A thoughtful withdrawal strategy smooths out your income to keep your tax burden low.
Building a financial plan on today's tax code is like building a house on shifting sand. Tax laws are not permanent; they change with political winds and economic needs. High-income earners are often the target of new tax legislation, so assuming today's rules will last forever is a risky bet. The key is to build flexibility into your plan with a mix of financial tools. By incorporating assets that offer durable tax advantages, like The And Asset®, you can create a financial structure that is less dependent on future tax law and gives you more control over your wealth long-term.
Putting together a tax strategy isn't like following a recipe. Because your financial life is unique, there's no single solution that works for everyone, especially for high-income earners. The strategies we've covered are powerful tools, but they work best when they are part of a cohesive plan built for your specific goals. Creating this plan involves more than just year-end tax moves; it requires a forward-looking approach that integrates every part of your financial world.
It’s easy to read about tax strategies, but it’s much harder to know which ones apply to you and how to implement them correctly. That's where a team of professionals comes in. Working with a financial advisor and a tax professional is critical for creating a tax-efficient retirement plan that fits your situation. They can help you see the full picture, identify potential blind spots, and coordinate complex strategies you might not manage alone. The right team of professionals doesn't just give advice; they work with you to build a strategy that aligns with your version of an intentional life.
Your financial plan shouldn't be a document you create once and then file away. Think of it as a living blueprint that needs to adapt as your life changes. Major life events like selling a business, taking Social Security, moving to a new state, or experiencing significant healthcare costs can all impact your tax situation. Even changes in tax laws can make your plan less effective. That’s why it’s important to review your plan regularly, at least annually, and any time a big life event occurs. Staying informed and checking in with your financial team ensures your strategy remains aligned with your goals.
For high-income earners, tax planning and estate planning are deeply connected. A decision in one area almost always affects the other. While maximizing contributions to tax-advantaged retirement accounts is a great foundational strategy, you also need to think about how those assets will be passed on. Advanced strategies can help lower your tax liability now while setting up a more efficient transfer of wealth later. These can include 1031 exchanges, loss harvesting, and strategically designed whole life insurance policies. By aligning your tax and estate plans, you create a seamless strategy that protects your wealth and preserves your legacy.
This is a lot of information. What's the most important first step I should take? The most important first step is to get a clear, complete picture of where you stand right now. This means gathering statements for all your accounts: taxable brokerage, traditional IRAs, 401(k)s, Roths, and anything else you own. Once you see the balances and how they are allocated, you can begin to project your future income and potential tax liabilities. This initial inventory is the foundation for any strategy. It shows you what tools you have to work with and helps you, or a professional you work with, identify the biggest opportunities for tax savings.
You mentioned using life insurance for income. Isn't it better to just invest my money in the market? This is a great question because it highlights a common "either, or" mindset. A better approach is to think "both, and." Investing in the market is essential for growth, but it comes with volatility and tax consequences upon withdrawal. A properly designed cash value life insurance policy provides a complementary source of capital. You can borrow against your cash value, generally tax-free, to create an income stream without having to sell your market investments, especially during a downturn. This gives you flexibility and control, allowing your market assets to continue growing while you access funds from your policy.
Is a Roth conversion a good idea even if it means a huge tax bill this year? Not necessarily. A Roth conversion is a powerful strategy, but it's not an all-or-nothing decision. Paying a massive tax bill in a single year can do more harm than good. For many people, the best approach is to perform a series of smaller, partial conversions over several years. This allows you to "fill up" lower tax brackets each year without pushing yourself into the highest ones. The ideal time is often in low-income years, like after you retire but before you start taking Social Security or RMDs. The goal is to pay the tax at a rate you choose, not at the highest rate possible.
How do I know if my RMDs will be a problem, and is it too late to do anything if I'm already near retirement? You can get a good idea by projecting the future value of your tax-deferred accounts. If the balances are substantial, your Required Minimum Distributions (RMDs) will likely be large enough to push you into a higher tax bracket. The good news is that it's rarely too late to act. Even if you are in your late 60s, you have options. You can use strategies like Qualified Charitable Distributions (QCDs) to satisfy your RMD without adding to your taxable income. You can also consider Roth conversions in the years before RMDs begin to shrink the size of your tax-deferred accounts.
With tax laws always changing, how can I create a plan that will actually last? You are right to be concerned about changing laws. The key is to build a plan that is flexible and not dependent on any single tax rule. The best way to do this is through diversification, not just of your investments, but of your tax treatments. By owning assets in taxable, tax-deferred, and tax-free accounts, you give yourself the ability to pull income from different sources depending on the tax environment at the time. Including assets like cash value life insurance, which has enjoyed favorable tax treatment for over a century, adds another layer of stability and control to your plan.
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