Tax Panning in Retirement

Tax planning in retirement is a complicated business, so you may need expert help. If you don't have to take minimum required distributions from your IRA or 401(k) plan yet, it makes sense to leave that money tucked in its tax shelter as long as possible. Rely on social security, pension benefits and money produced by taxable accounts before invading tax-sheltered accounts.

Remember that when you draw money out of a taxable account, it goes much further than when you pull cash out of a tax-deferred account. Why? Because you've already paid at least part of the taxes on assets stashed in a taxable account. Everything coming out of an IRA or company plan is taxable (unless you made nondeductible contributions or are tapping a Roth IRA).

Retired individuals investing in bonds should first read The Bond Bible by Marilyn Cohen. Three sites that I have used successfully for purchasing government bonds are www.publicdebt.treas.gov/sav/sav, http://www.treasurydirect.gov/ and http://www.investinginbonds.com/. You will want a portion of your retirement funds in fixed-income (Bonds) either directly or indirectly through mutual funds.

As a broker, I made more money buying and selling acting as “principal” and not “agency” because the mark-up and mark-down is HIDDEN from the client. Please buy direct or through a broker acting as an agency. This is one of these least understood and most confusing issues facing the individual bond buyer today. Mark-up is how the broker makes a commission and affects your bond yield at purchase.

Here are Model Portfolios for Retirees: Five allocation options, from preservation to aggressive growth, from Morningstar.