Since it’s tax season, I wanted to share a quick (but important) reminder about planning: it’s not only what you earn—it’s what you keep after taxes. One of the biggest opportunities I see is simply understanding how different dollars are taxed, and making sure you have options.
The 3 “tax buckets” (simple overview)
Most savings fall into one (or more) of these categories:
1) Taxable (bank accounts, brokerage accounts)
You may owe taxes along the way (interest, dividends, capital gains).
The benefit is flexibility—there are generally fewer rules around access.
2) Tax-deferred (401(k), IRA, and annuities)
Growth is typically tax-deferred.
Taxes are generally due when money comes out—often as ordinary income depending on the account/product.
This can be a useful tool when you’re looking to build long-term savings and defer taxes on growth.
3) Potentially tax-advantaged / tax-free (depending on structure and situation)
Whole life insurance can provide lifelong protection and build cash value. When designed properly, it can also offer flexible access to cash value as an additional pool of funds alongside taxable and tax-deferred accounts.
The death benefit is generally income-tax-free to beneficiaries.
Why this matters (the planning “win”)
Having money in multiple buckets can give you more control later—especially in retirement—because you’re not forced to take all income from one place at the same time. In many cases, this can help with:
Managing tax brackets (avoiding unnecessary jumps in taxable income)
Coordinating with Social Security and RMDs (required minimum distributions)
Reducing the tax impact of large one-time expenses (cars, home repairs, helping kids, etc.)
Creating a more predictable retirement paycheck (where an annuity may help for income you can’t outlive, while other accounts provide flexibility)
Tax-season “to do” items worth checking.
Tax time is also a perfect reminder to make sure the basics are aligned:
- Beneficiaries: Are your beneficiaries correct on policies, annuities, and retirement accounts?
- Withholding & estimated taxes: If you retired recently, changed jobs, or started taking distributions, it may be time to review.
- Account coordination: Do you know which accounts you plan to pull from first, and why?