Tax Efficient Annuities Strategies for Retirement | SafeMone

By Brent Meyer — SafeMoney.com Founder & Editor Reviewed by Licensed Financial Professionals  |  SafeMoney.com — Trusted Since 2011  |  Updated Regularly Quick Answer: Discover tax-efficient strategies using annuities for retirement. Maximize your income and secure your future. Learn more at SafeMoney.com. As an annuity owner, you take comfort in knowing that you have planned for an uninterrupted lifelong retirement income stream . Working alongside other income sources from your nest egg, it will pay out, like clockwork, to fund the retirement you have always imagined. But have you considered whether your income streams are as “efficient” as possible? Whatever retirement strategy you choose — income and all — needs to be “ tax-efficient ” to ensure you get the most mileage out of your money. This is just one more piece in the retirement planning puzzle that each of us must solve. When we  don’t plan for retirement , we run the risk of underspending or overspending our retirement dollars. What if underspending doesn’t seem like a problem, but rather like an advantage? Consider what events and opportunities to which you may say “no.” And simply because underspending pressures you to have a scarcity mentality, or when you don’t really know if you can afford them. Perhaps you might pass on an important family event or skip that overseas vacation you always expected to be a highlight of your retirement years. All because you didn’t have a true picture of your anticipated income compared to your expenses . Overspending can be a Dangerous Double Dip Overspending can lead to even more obvious consequences. Belt tightening when you long ago gave up even wearing belts—and anything else that constricted you or your lifestyle. But if the bulk of your retirement money is in qualified accounts – or in accounts with a pre-tax advantage for accumulation – undisciplined withdrawals could be a ticking tax time bomb waiting to explode.  For example, if you withdraw money for income in a given year, you won’t have that full sum for income. For example, say you need to take $20,000 from your $500,000 traditional IRA to cover your income gap for the year. Since the $20,000 balance is part of funds that have grown tax-deferred, Uncle Sam will ask for his share. You will owe taxes on the balance at your top effective rate when you withdraw it. That means you won’t have the full $20,000 to use for your ye