Social Security Tax Breaks Drive New Retirement Strategy; this is an excellent article on an added benefit of delaying Social Security; a potentially lower tax bill throughout retirement.
Many people start Social Security early and think they should delay their IRA withdrawals as long as possible, taking only the required minimum distribution starting at their age 70. When you factor in taxes, this isn't always the best strategy.
Even those who delay Social Security often neglect to realize that there may be a tax benefit to taking IRA withdrawals before they reach age 70.
A Journal of Financial Planning article published earlier this year, Tax-Efficient Retirement Withdrawal Planning Using a Comprehensive Tax Model, offers some additional insight into the most efficient way to take withdrawals. Their research shows that at a minimum you want to withdraw tax-deferred assets up to the amount of deductions.
If you're not sure how your retirement income might be taxed brush up on the basics at Frequently Asked Questions on Retirement Taxes.
The key to all of this is incorporating tax planning with your retirement account withdrawals. Unfortunately, lots of advisors are not allowed to provide tax planning. Those who can typically hold either a PFS designation, which is a financial planning designation offered to CPAs, or they practice as fee-only advisors with no broker-dealer affiliation.
Advisors who have a broker-dealer, work for a brokerage firm, or work as an insurance agent may be limited by their firms as to their ability to incorporate meaningful tax planning into their retirement advice.
I am hopeful the financial services industry will evolve, moving the direction of training advisors on taxes and allowing them to give advice on all areas that have an impact; like peanut butter and chocolate, tax planning and retirement income planning go to together.