How can I use a low income year to my advantage?

I have the option of largely living off my savings for the 1st year (or 2) of my retirement. My annual income will be limited to $9,000 gross from an annuity, and around $1,200 from a small brokerage account. What moves should I make in this low income bracket year? Should I be harvesting my capital gains (tax free?) from the brokerage account?

Retirement, Taxes
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August 2017
83% of people found this answer helpful

Congratulations on making it to retirement!  We hope you are positioned well enough to love your retirement years.

This question is an excellent one that may present you with a good opportunity to take advantage of certain strategies you would not ordinarilly be in a position to use.

I would preface this answer by saying, it is very important that you consult with your or find a fiduciary advisor to guide you.  This advisor will also need to coordinate efforts with your tax advisor.  Decisions like these should be made hand in hand with these two members of your financial team.

You may be able to utilize some of the following strategies:

1) Capture capital gains in positions with low basis

2) Converting IRA assets to a Roth IRA

3) Removing assets from assets that would produce ordinary income tax

These are the top three strategic moves you may want to consider.  I would make sure that you consult with your team and find out what will be the best strategies for you.

Best of luck as you enter this next stage of your life and enjoy. 

August 2017
August 2017
August 2017