Income Strategies in Retirement, When you retire, you will probably have several sources of income. These may include traditional individual retirement accounts (IRAs) , Roth lRAs, pensions, 401(k) or 403(b) accounts, mutual fund and brokerage accounts, and Social Security. You'll want to have a strategy for managing your income and withdrawing from your accounts that incorporates appropriate tax considerations. Social Security You can take Social Security benefits as early as age 62, but you may want to consider waiting. If you start before full retirement age, you will receive a reduced benefit. And for each year you delay • beyond full retirement age (up to age 70), you can increase your benefit as much as 8% (in addition to annual cost-of-living adjustments). The larger your Social Security benefit, the less money you will need to draw from your own portfolio. A portion of your Social Security will be taxable, at ordinary tax rates, if your "provisional income" exceeds certain thresholds. Provisional income includes 1 00% of most types of income but only 50% of Social Security benefits. Maximizing your benefit amount may allow you to take less from other accounts, reducing provisional income and, potentially, the taxes payable on your Social Security. Pensions and Retirement Accounts Will you receive a pension? Those payments generally will be taxable to you at the same rates that apply to your other ordinary income, such as rental income or interest. Ordinary tax rates also apply to withdrawals from traditional lRAs, 401 (k)s, and similar tax-deferred retirement accounts, except to the extent the withdrawals represent a return of after-tax contributions. Once you reach age 70th, you generally will be required to withdraw minimum amounts from these accounts each year to avoid penalties. Qualified withdrawals from Roth accounts are tax free, and you're not required to take money from them during your lifetime. Dividends and Capital Gains Qualified dividend income and long term capital gains realized in taxable investment accounts receive favorable tax treatment. This income is generally taxed at 15%, although the rate can be as low as 0% for those in the 10% or 15% ordinary bracket or as high as 20% for those in the top 39.6% ordinary bracket. Withdrawal Order Generally, you should consider withdrawing from taxable investments first and tax deferred investments second. Why? You can benefit from the favorable capital gains rates and give your tax-deferred investments more time to grow. Withdrawing tax-free money from a Roth account should generally happen last. However, every situation is different. We can help you develop a tax strategy for your personal situation. Deducting Job Search Expenses Finding a new job can be stressful. But there may be an upside: Some or all of your job hunting expenses may be tax deductible. For the expenses to qualify, you must. be looking for a job in the same trade or business as your current position (or your most recent position if you are temporarily unemployed). You cannot deduct job search expenses if there has been a substantial break between the end of your prior position and your search for a new one. The IRS allows you to deduct a variety of expenses, including travel for interviews, resume printing and postage, and job counseling or employment agency fees. These expenses may qualify even if you are not offered or do not accept a new position. Job search expenses are a miscellaneous itemized deduction. The tax law limits the deduction for miscellaneous expenses to the combined amount in excess of 2% of adjusted gross income.