6 Tax-Free Retirement Incomes

In retirement planning, taxes are often overlooked. Taxes can deplete your savings without proper planning.

Roth Withdrawals

Roth accounts are the easiest way to avoid retirement taxes. Roth accounts don't offer a tax deduction on contributions but allow tax-free withdrawals after age 59 12.

Start a Roth early in your career to avoid a huge tax bill during your peak earning years.


An inheritance isn't a good retirement plan. An inheritance is never guaranteed, and the amount is rarely enough for a long retirement..

Many Americans receive an inheritance, which can supplement retirement savings. A tax-free inheritance is the best part financially. Beneficiaries aren't responsible for estate taxes, which are rare.

Municipal income

Municipal bonds are issued by states, cities and various localities, generally to fund projects like schools, roads and other items that are for the common good. Investors don't pay federal taxes on municipal bond interest.

Buying a state-issued bond usually exempts you from state taxes. High-tax states like California benefit from municipal bonds. As tax-exempt, safe investments, they can be a good source of retirement income.

HSA Withdrawals

HSAs combine the best features of traditional and Roth IRAs. HSA contributions are tax-deductible and tax-free.

Withdrawals for qualified medical expenses are tax-free. Withdrawals will be penalised 20% otherwise. Once you turn 65, you can withdraw your HSA money for any reason without penalty.


Social Security payments aren't always taxable. Living off Social Security retirement benefits is tax-free. Depending on your income, some or all of your payments may be taxable. 2022 Social Security taxation by income and filing status:

Individuals with a combined income of $25,000 to $34,000 may be taxed up to 50% of their benefits; those with incomes over $34,000 may be taxed up to 85%.

Death Benefits

Life insurance payouts aren't a good way to fund a retirement plan, like inheritances. Your senior years may include a life insurance payout.

These distributions can be in the hundreds of thousands of dollars, affecting your retirement savings. As with inheritances, life insurance proceeds are tax-free when taken in a lump sum.

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