I’m 57 years old and planning to retire in 10 years with modest savings of $450K — how can I minimize my taxes so the cash can last through retirement?

Consider Roth accounts

Retirement accounts can be grouped into two groups:

• Traditional accounts, which allow for pre-tax contributions but require taxes to be paid on withdrawals
• Roth accounts, which you contribute to with after-tax dollars but which allow tax-free withdrawals

If you haven't already, start contributing to a Roth IRA to enjoy tax-free income in retirement.

If most of your money is in a traditional account, you might consider a Roth conversion. However, there are a couple of catches with conversion.

When converting funds from a traditional to a Roth account, you’ll need to pay taxes on the amount moved, so it’s best to do this in a year when you’re in a lower tax bracket. Additionally, be mindful of the five-year rule for conversions: you must wait five years from the conversion date to make tax-free withdrawals. This five-year period starts in January of the conversion year.

These complexities can be manageable, especially if you're 10 years away from retirement and can convert funds during a market downturn or a low-earning year. However, a strategic approach is essential to maximize tax savings in retirement.

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Be strategic about withdrawals

Starting at age 73, you'll need withdraw funds from tax-deferred accounts like traditional 401(k) and IRA accounts due to Required Minimum Distribution Rules (RMDs) rules. These withdrawals are treated as taxable income and will be taxed at your ordinary income tax rate.

However, you may not want to wait as taking money slowly before RMDs start can help you avoid a sudden increase in taxable income that pushes you into a higher tax bracket.

You should also be strategic about the timing of your withdrawals — especially if you have traditional and Roth accounts. If you expect your income to decline as you age, you may want to draw more from your Roths first when you are in the higher tax bracket.

Know the rules for Social Security taxes

Social Security benefits are not taxable until your income reaches a certain threshold. You need to know what the rules are so you can try to avoid decisions that would make these benefits taxable.

The Social Security Administration taxes based on your provisional income, which includes half of your Social Security benefits plus all taxable and some non-taxable income. If your provisional income exceeds $25,000 for single filers or $32,000 for married joint filers, a part of your Social Security benefits becomes taxable.

To minimize taxes, aim to keep your provisional income below these thresholds. This may involve limiting withdrawals from taxable accounts and instead using funds from Roth accounts or other tax-free sources when getting close to the limit.

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Live in the right place

Some states do not tax income at all. Others don't tax pensions, retirement account distributions, or Social Security benefits.

However, a few states do tax some or all forms of retirement income. If you're concerned about preserving your money, you may want to avoid these areas.

By taking these steps, you can hopefully make your money last longer. With another decade to save, you still have time to grow that modest $450,000 in savings through continued contributions and investments. Consider focusing on Roth accounts to build a generous amount of money for retirement.