Leverage These 5 Retirement Tax Diversification Strategies

When you're depending on your savings to do the heavy lifting in retirement, you need to wring out as much income as you can from every dollar of savings. However, if most of your savings are in tax-deferred accounts, you'll end up sharing your windfall with Uncle Sam in the form of taxes on your retirement distributions.

Those taxes cut into your income by anywhere from 10% to 37%, depending on your tax bracket, where you live and your investment strategies. That means that the $500,000 that you have saved, is actually not $500,000 -- rather, you must discount it by how much you'll owe the federal, state and local governments each and every year that you take retirement distributions.

Early in your retirement, this isn't a big issue, because you don't have to take distributions from your tax-deferred accounts unless you want to. That changes when the IRS requires you to begin taking based on