Upcoming Retirement? Tips and Tricks

Retirement tax tips

A lot of people in the process of retiring have not yet fully considered the discrepancy between their assumed retirement income and their expected expenditures.

There are others who haven’t even begun to plan their retirement at all because they don’t have the money or knowledge to do so.

You can take steps today to reduce your post-retirement expenses, even if you have failed to prepare thus far.

Focusing on high yielding and out-of-favor stocks (hoping for a large payoff on the upswing) is where retirees often attempt to fill in the income gaps. While this strategy can occasionally be rewarding, that is often not the case. A more levelheaded method of creating a sustainable income over the course of many years is to build a diverse portfolio of mutual funds, ETFs, bond, and dividend-paying stocks.


Downsizing is a tool that a lot of newly retired people fail to take advantage of. It can both lower your monthly expenditures and free up more income-generating investments.


The home is the single biggest asset most retirees own. The value of most homes increases over the years, and through mortgage payments and maintenance, the equity in your home typically rises. But you must ask yourself, now that you’re retiring, do you need the same size home that you currently live in.

Increasing your income per month could be as simple as figuring out the cost of a smaller house as opposed to your current one. To add to that, smaller houses cost less to maintain, which could free up some funds tied in with your current home. Other things that can be lowered through downsizing your home would be insurance, utility costs, and property taxes.


Vehicles can be costly to own. You can easily save money on maintenance and insurance by selling off unnecessary vehicles. Reinvesting in a newer car could create an income of up to $20,000 which, if put into a CD at 3 percent, could generate another $600 of annual income.

You could also net you an additional $1000 annually or more, depending on where you live, by foregoing the insurance and maintenance costs of that extra vehicle.


Selling off unnecessary, accumulated possessions on sites like Craigslist, GunBroker, and eBay is an excellent way to generate quick income. Also, donating your unwanted stuff to stores like GoodWill and the ReStore deducted from your year-end tax returns.

Relocation (to a Low-Tax State)

If you end up downsizing your home, why not cash in even further and relocate yourself to a more tax-friendly state? Relocating outside of America, where the cost of living is lower, may save you even more money.

The discrepancy in the tax burden between different states can be vast. I will provide the example of South Carolina v. North Carolina v. Tennessee.

South Carolina offers pension, 401k, IRA and social security exemptions on the income of retirees. The top rate on income in South Carolina is 7 percent, there is only a sales tax of 6 percent, and property taxes are amongst the lowest in the country. South Carolina also gives a $50,000 exemption on the estimated property value for local taxes and a $30,000 exemption on retiree’s income.

The income tax rate in the state of North Carolina was recently reduced to 5.49 percent. Additionally, the sales tax is only 4.75 percent, and they do not tax the benefits you receive from social security. For those over 65, you may also be eligible for a partial exemption on your property taxes.

In Tennessee earned income is not taxed, but income from unearned sources such as dividends and interest can be taxed at a rate of up to 6 percent, although legislation just passed to abolish this as well, making it one of the lowest taxed states. Property taxes there are also among the lowest in the country.

So from a tax standpoint, which state is the best? The answer is, it varies. Those who get a large portion of their income from non-qualified accounts may choose North Carolina, with it’s lower income tax rate, while those with income-based mostly off of social security, pension, and 401k may want to opt for South Carolina.

Due diligence is necessary should you chose to relocate to a low-tax state, taking into account how your taxes will be target towards your specific income.


You can easily strengthen your retirement portfolio by diversifying and simplifying your investments.

No Yields

Gaining as much income as possible from their invested assets is the goal of most retirees. While it is possible to receive yields more than 10 percent from stocks and bonds, yields that high are very rare. At 10 percent yield (or more) is not really tenable in today current climate, even if underlying securities pay out on those yields initially.

The idea is that your principal should be protected, and you’d be lucky to get it back if there was another recession or if the market took a downturn. In retirement, you may not have the income to cover the gap, or you may not have the time, should the economy turn down. The smart move is to look at the companies that have made it through major market recessions and then invest in those. Equities with a history of growth turning waxing and waning markets are what retirees should be searching for when it comes to investments.

No “Turnaround Stocks”

It takes a lot of capital, management, and a bit of economic luck to create a successful “turnaround stock.” All of these conditions being favorable is a rare occurrence.

The kind of due diligence required to make money on a turnaround stock is typically more than most investors are willing to commit to.


You will find you receive steadier returns when your portfolio is diversified. Most retirees cannot afford to experience large losses, and diversification will lower your risks of that.

It behooves you to own a large amount of individual stocks, so that you diversify not just across different types of equity, but within each sector too. Diversification across all types of assets is a smart move as well. A retirement portfolio should contain both bonds and stocks.


Just remember, there are many avenues available to you that can help lower your retirement expenses. Downsizing your living situation, reconsidering your transportation, selling your unneeded stuff, and relocating to a lower tax state can very quickly cut your annual expenditures by up to $15,000.

And when it comes to a portfolio, there a few easy rules for investing that will aid along the way:

1.  Say “no” to yields.

2. Say “no” to turnaround stocks.

3. Diversification across business sectors and asset types is key.

All of these things together should help put your mind at ease and to enjoy your retirement for years to come.

Retirement Tips

Leave a Reply