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Approaching Your “Retirement Cliff”?

Matthew Costigan, CFP®, CPA/PFS

06/22/2017 — Download

It’s Time for a Tax-Smart Retirement Income Plan.

If you are in your late 50s or early 60s, then you are fast approaching what is known as the “retirement cliff,” the end of the earned income period of your life. That income the money you live on, the money that supports you, your family, your lifestyle. So how will you replace those wages with retirement income? And how can you do it in a tax-smart way?

If you have multiple retirement assets – IRAs, after-tax investments, Social Security, a pension, a Health Savings Account – income planning is an effective way to maximize your assets in retirement. Income planning has become more important in recent decades as people are living longer; no one wants to outlive their money.

The key to an effective long-term retirement income plan is flexibility. You need to review your plan on an ongoing basis with a qualified financial professional who can help you tweak your strategies to maximize current income. Tax laws and rates, standard deductions, exemptions – the rules and rates change from year to year, and your plan should be adjusted to accommodate the changes. Your retirement income plan will likely look very different from the original five or ten years after its implementation date.

For example, here are a few retirement income plan tax considerations:

  • Proper liquidation of IRA and non-qualified assets. Conventional wisdom tells you to defer IRA payments as long as possible. A proper liquidation plan in retirement generally means withdrawing from both IRA and non-qualified accounts simultaneously. Figuring out the right formula is key to maximizing your after-tax benefit. Establish and prioritize financial goals and time frames for achieving these goals.
  • Bunching medical deductions into a single year in order to exceed the deduction threshold. Medical expenses increase with age. It is important to maximize the deduction for out-of-pocket costs.
  • Proper use of tax-exempt bonds and taxable bonds. Tax-exempt bonds might not be an advantageous investment in retirement given that you are replacing earned income with portfolio income and IRA withdrawals.
  • Timing of charitable deductions and the use of IRA-required minimum distributions to fund charitable donations. Retirees often want to designate a portion of their income to charitable contributions. A tax deduction is an appropriate reward for your generosity.
  • Using the 0% tax bracket for long-term capital gains and qualified dividends. Tax changes are looming. Plan to use this tax-break while you can.

HBKS Wealth Advisors and HBK CPAs & Consultants develop, tailor and edit tax-efficient retirement income strategies for people approaching the “retirement cliff.” You’ve worked hard to accumulate assets; it makes sense to collaborate with professionals who will help you maximize your return on those assets throughout your retirement years.



Matthew Costigan, CFP®, CPA/PFS is a Senior Financial Advisor at HBKS Wealth Advisors in Pittsburgh, Pennsylvania. He utilizes a holistic financial planning approach to assist his affluent clients preserve and grow wealth. Matt develops investment and wealth protection plans that help attain their families’ financial objectives.


The topics discussed above are generic in nature and provided for educational purposes only. This article does not consider or address any individual’s circumstances, and as such, cannot be relied on as individual advice. HBKS® Wealth Advisors is not a legal or accounting firm, and does not render legal, accounting or tax advice. You should contact an attorney or CPA if you wish to receive legal, accounting or tax advice.


HBKS® Wealth Advisors is the wealth management business of HBK CPAs & Consultants (HBK), offering the collective intelligence of 400 professionals in a wide range of tax, accounting, audit, business advisory, valuation, financial planning, wealth management and support services from 14 offices in Pennsylvania, Ohio, New Jersey, New York and Florida. As an RIA, HBKS® operates in accordance with the highest ethical standards and according to the strictest interpretation of fiduciary responsibility.

Insurance products are offered through HBK Sorce Insurance LLC. Investment advisory services are offered through HBK Sorce Advisory LLC, doing business as HBKS® Wealth Advisors. NOT FDIC INSURED – NOT BANK GUARANTEED – MAY LOSE VALUE, INCLUDING LOSS OF PRINCIPAL – NOT INSURED BY ANY STATE OR FEDERAL AGENCY.

Man Overlooking a Cliff

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