Whether you are work optional or retired , you don ’ t want to include Uncle Sam in your retirement more than is necessary .

At the stage of being work optional or financially free , it ’ s not about what you make , it ’ s about what you keep ( and protect ). This stage of life is all about regular , tax efficient income to do what you love .

Let ’ s say you accumulated enough assets to generate the income you need to walk away from work if you choose to . The income could be subject to unnecessary taxes or perhaps to higher income taxes down the road . Higher taxes translate to more income distribution needed to maintain the same purchasing power . A higher distribution rate can put your plan in jeopardy . On the flip side , the less taxes you must pay means more income in your pocket and the opportunity for your assets , generating the income , to grow or maintain .

CFP ®, AAMS ®, RICP ® President

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Let ’ s look at a specific idea on keeping more of what you have built . Most individuals will have a large portion of their investment assets in a pretax account ( traditional IRA , employer retirement plan , annuities , etc ). Distributions from these types of accounts are treated as normal income and subject to federal and state taxes . We also know down the road you will most likely collect Social Security benefits . By carefully coordinating your social security with your pretax distributions for income , you can potentially decrease your taxes .

There are many different strategies that can be positioned in a well-coordinated plan to address keeping more in your pockets and less in Uncle Sam ’ s . Other considerations can include asset location ( addressing where to place your assets to be more tax efficient ), Roth conversions , GeoArbitrage , deferring taxes by utilizing exchange funds to relieve concentrated stock positions with low-cost basis , long term care insurance , legacy planning , capital gains planning , etc .

When you become work optional or financially free , the goal is to have the freedom to do what you want and protect what you worked so hard to achieve . The goal is not to have to go back to work ( involuntarily ) or compromise your lifestyle if you retired too early . Remember the saying , ‘ measure your cloth ten times you can cut it but once ’. Planning in advance cannot be underestimated , but could be the key to a successful or even earlier work optional / retired lifestyle .

Investing involves risk and you may incur a profit or loss regardless of strategy selected , including diversification and asset allocation . Past performance may not be indicative of future results . This material is being provided for information purposes only and is not a complete description , nor is it a recommendation . Investors should consult their investment professional prior to making an investment decision . Opinions expressed in the attached article are those of the author and are not necessarily those of Raymond James . Expressions of opinion are as of this date and are subject to change without notice . There is no guarantee that these statements , opinions or forecasts provided herein will prove to be correct .

Please note , changes in tax laws may occur at any time and could have a substantial impact upon each person ’ s situation . While we are familiar with the tax provisions of the issues presented herein , as Financial Advisors of RJFS , we are not qualified to render advice on tax or legal matters . You should discuss tax or legal matters with the appropriate professional .

Securities offered through Raymond James Financial Services , Inc . Member FINRA / SIPC . Investment advisory services are offered through Raymond James Financial Services Advisors , Inc . Vivian Investment Partners is not a registered broker / dealer and is independent of Raymond James Financial Services .

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