11 Ways To Pay Less Tax in Retirement by Making These Simple Moves Today

Planning for retirement often includes looking at ways to keep your taxes as low as possible during your golden years.

For example, keeping your tax bracket in the 12% range is a "sweet spot" that can save you a lot of money compared to falling into the next tax bracket of 22% — to say nothing of the 24% and 32% brackets.

The good news is that you may already have some of the tools needed to cut your tax bill. Here's a look at 11 savvy ways to do it.

This is one of the simplest — yet most overlooked — ways to trim your tax bill in retirement.

If you keep expenses low, you will not need to withdraw as much cash from a traditional IRA or 401(k) to fund your lifestyle. The less money you withdraw from these accounts, the less you will pay in taxes.

Eventually, you will have to take required minimum distributions at age 73, so this strategy only works for so long. But it also buys you time to work with a tax professional or financial advisor so you can minimize the tax impact when your 73rd birthday arrives.

When you make a contribution to a Roth IRA or Roth 401(k), you do not get a tax break in the year of your contribution. However, you can later withdraw the money tax-free, and the funds are exempt from required minimum distributions.

Because of these twin advantages, Roth savings give you extra flexibility in how you manage your overall tax obligations. Making Roth withdrawals intelligently can lower your tax burden.

If you have a lot of money in a traditional IRA or 401(k), you might worry about having to pay big tax bills on the withdrawals in retirement. One possible way to avoid this fate is to undertake a series of Roth conversions over several years while your income is lower.

Like most of the suggestions on this list, consulting with a tax professional or financial advisor can be a crucial component of getting the most from this strategy.

Your income in retirement likely will come from a variety of sources. That's why it's important to know how different types of income are taxed.

IRAs, 401(k)s, Social Security, annuities, and taxable savings are taxed differently. To keep taxes low, you will need to understand these differences and tap these various types of income skillfully to keep taxes as low as possible.

If you are already considering moving to another state for retirement, check out which places have the most tax-friendly laws.

For example, nine states have no income taxes: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

If you live and work in a state that taxes pensions, retirement account withdrawals, or Social Security benefits, consider relocating to another state that does not.

When you are working, putting money into tax-advantaged accounts lets you postpone having to pay taxes for years, or even decades.

You can continue to avoid these tax bills well into retirement. The longer you leave the money in these accounts during retirement, the longer you avoid paying taxes.

Leaving money in these accounts to continue to grow is often a smart strategy, but not always. Your individual circumstances will dictate the best approach for you.

Also, remember that with traditional IRAs and 401(k) plans, you will eventually have to take required minimum distributions beginning at age 73.

At the age of 73, you typically will be required to begin taking required minimum distributions (RMDs) from traditional IRA and 401(k) accounts. This can often result in higher tax bills than you might like.

However, there are many things you can do long before the age of 73 to lower your tax bill once you reach that age. 

For example, using Roth conversions to get money out of these types of accounts can be a good strategy for some people since RMD rules do not apply to Roth accounts.

You can use money from your IRA or 401(k) to buy a qualified longevity annuity contract (QLAC) within the retirement account. The good news is that funds allocated to the QLAC are exempt from RMD calculations.

However, QLACs also come with some potential drawbacks, including relatively high fees and the fact that payments might be taxable. You might want to speak to a financial professional before deciding whether this is the right approach for you.

Ordinary income tax rates are much higher than the capital gains tax rates that apply on investments ranging from stocks and bonds to real estate and precious metals.

That means the money you keep in a brokerage account often can be withdrawn at lower tax rates than what you would pay when making withdrawals from a traditional IRA or 401(k) account. If your income is modest enough, your capital gains rate could be zero.

If you have a traditional IRA, you can tap into those funds to make a qualified charitable distribution (QCD). Doing so will reduce your taxable income.

This is a great way to do good for others while also boosting your own bottom line. Just keep in mind that you must be age 70 1/2 or older to take advantage of this strategy.

If you wait to file for Social Security, you can significantly increase your monthly benefit. In fact, you will increase your monthly haul for each year you wait to file up to age 70.

Another advantage of delaying is that you won't have to pay taxes on Social Security income during the years before you file. This strategy may be possible for you with a little smart planning and the ability to tap some other money sources.

The key to making this plan work so you can keep more cash in your wallet is to withdraw money in the most tax-efficient manner possible. Working with a tax professional or financial advisor can really help here.

These savvy ways to stay in the retirement tax bracket "sweet spot" can help you enjoy a more stress-free retirement.

Strategies such as using Roth IRA and Roth 401(k) options and taking advantage of lower capital gains tax rates can lower your tax bill.

Consider working with a tax professional or financial advisor for guidance on your personal situation and the options available to you.