Retirement Income Splitting Strategies

Retirement Income Splitting Strategies

Retirement Income Splitting Strategies refer to financial planning techniques aimed at reducing a couple’s overall tax liability during retirement by distributing income between spouses in a tax-efficient manner.

This involves allocating various sources of retirement income, such as pensions, annuities, or withdrawals from retirement accounts, between partners to take advantage of lower tax brackets or to minimize taxes on Social Security benefits. For example, if one spouse has a significantly higher income, shifting some of the income-producing assets or account withdrawals to the lower-income spouse can decrease the total tax burden.

Implementing these strategies requires careful consideration of tax laws, retirement account rules, and each spouse’s financial situation to optimize the overall income and tax efficiency in retirement.