Source: flickr user Ken Teegardin.

If you've saved your whole life to build your retirement nest egg, the last thing you want to do is hand over more of your hard-earned savings than you absolutely need to. However, if you withdraw too much of your retirement funds in a single year, live in a "high-tax" area, or don't use all of the tax-advantaged investment options available, that's exactly what you're going to do. Fortunately, there are several smart ways you can reduce your taxes in retirement, and here's what five of our retirement experts have to say about it.

Selena Maranjian: While you're working, if you earn more, you generally pay more in taxes. It's kind of the same in retirement, only instead of earning money through work, you often draw much of your income from retirement accounts such as IRAs and 401(k)s. Roth IRAs and Roth 401(k)s, funded with post-tax dollars, will permit you withdraw money tax-free, but traditional IRAs and traditional 401(k)s tax your withdrawals at ordinary income tax rates, which can top 30% for high-income people. Thus, one way to pay less in taxes during your retirement is to withdraw less from your retirement accounts and to spend less.

All of your withdrawals may not be within your control, as some retirement accounts, such as traditional IRAs and both traditional and Roth 401(k)s have required minimum distributions that begin at age 70 1/2. Still, if you're able to withdraw just the minimum and not much more, you'll reduce your tax liability.

One way to do so is to have your mortgage paid off by the time you retire, so you don't have to withdraw enough to make those sizable monthly payments. You might also reduce expenses by only maintaining and insuring one vehicle, by downsizing your home, and by making seemingly small changes that can add up, such as cutting the cable TV cord and relying on streaming video services for on-screen entertainment.

For 2015, single tax filers with adjusted gross incomes, or AGIs, up to $37,450 and married-filing-jointly taxpayers with AGIs up to $74,900 will remain in the 15% tax bracket. (AGIs take into account deductions and exemptions.) If you exceed that goal a bit, you'll only face the 25% tax rate on the amount by which you exceed it.

Jordan Wathen: It may sound extreme, but moving across a state border can have a significant impact on your taxes. It doesn't have to be as complicated as moving from Maine to Alaska, either. A small distance can go a long way in reducing how much you hand over to Uncle Sam.

According to The Washington Post, Oregon's state income tax tops out at a whopping 9.9%, but its northern neighbor, Washington, doesn't have a state tax at all. Likewise, Kentucky income taxes top out at 6% of income, but Indiana's peak at 3.4%. New York's 8.82% top tax rate pales in comparison to the 3.07% rate of Pennsylvania.

If you live near a state border, it may be worth considering. You might just find that moving one state in any direction offers all that you've come to love about where you live (proximity to family, climate, etc.) without the sky-high state taxes you've grown accustomed to paying during your working years.

Sean Williams: If you're not afraid of a little complication come tax time, considering income vehicles such as master-limited partnerships or real estate investment trusts -- MLPs and REITs -- could wind up saving you a pretty penny in retirement.

MLPs, which are tax-exempt, publicly traded companies than own pipelines and other energy assets, are required to return a significant portion of their profits to investors in the form of a dividend. However, this payout isn't your traditional dividend that you pay tax on once you receive it. Instead, MLP distributions are considered returns of capital that lower your cost basis. In theory, you can collect a substantial payout from an MLP each year, clam it as a return on capital until you've recouped the full amount of your original investment, and get away without paying a cent in taxes! When you sell the MLP, then you'll pay your capital gains taxes.

Like MLPs, REITs are often exempt from corporate taxation as long as they return 90% of their taxable earnings to unitholders. Typically, dividends paid to unitholders are taxable. However, depreciation and accelerated depreciation of assets within a REITs portfolio may result in a portion of your dividend becoming a nontaxable return of capital. Just as with an MLP, a return of capital lowers your cost basis, and you'll pay capital gains on the difference only when you sell the stock. In the meantime, the amount you pay in taxes on the distribution could be a lot lower than what you'd expect to pay due to the amount of depreciation and other expenses claimed by a REIT.

Overall, both MLPs and REITs could be great sources of extra income with minimal tax liability in retirement.

Brian Stoffel: My advice will work under only two conditions: (1) that you've followed Selena's advice and cut your spending down to the point that puts you in the 15% tax bracket, and (2) that you have investments sitting in non-retirement accounts that you have yet to cash out.

If you find yourself in this happy place, there's good news: you can slowly sell off your non-tax-advantaged investments and pay absolutely no capital gains taxes. That's because long-term capital gains are taxed like this:

Tax Bracket

Long-Term Capital Gains Tax Rate

10%-15%

0%

25%-35%

15%

39.6%

20%

Source: IRS.

That means that if your adjusted gross income (which will include these capital gains) keeps you below the upper limit for the 15% tax bracket, you get to enjoy your gains for free! If you're wondering where the cut-off limits are, here's where they stand for 2015.

Filing Status

Maximum Taxable Income for 15% Bracket

Single

$37,450

Filing Jointly

$74,900

Filing Separately

$37,450

Head of Household

$50,200

Source: IRS.

You can space these capital gains out over the years so that you never incur a gain large enough to let the taxman collect.

Matt Frankel: As you can see, there are several ways to lower your tax liability in retirement, but none are more effective than investing and saving in a Roth IRA.

Unlike a traditional IRA, Roth contributions are never tax-deductible, but all qualifying withdrawals in retirement are 100% tax-free. And, in the meantime, your money is free to grow and compound without worrying about annual dividend taxes or capital gains.

Essentially, a Roth IRA allows you to lock in your current tax rates, and this could potentially save you a boatload of money. After all, it isn't completely unreasonable to think that the federal income tax rate, and particularly for high earners, could be over 50% by the time you retire -- it's happened before!

There are other reasons to use a Roth IRA as well. For example:

  • With a Roth IRA, you are free to withdraw your original contributions (but not any investment gains) at any time without a penalty. So, a Roth IRA effectively allows you to create a tax-advantaged emergency fund while saving for retirement at the same time.
  • Unlike 401(k) and traditional IRA accounts, Roth IRAs don't have any minimum distribution requirements. You can let your money grow tax-free for as long as you want, making Roth accounts a great choice for those who might not need to use their money in the early years of their retirement.

For the 2015 tax year, you can contribute up to $5,500 to your Roth IRA ($6,500 if you're over 50), so this could take a serious bite out of your tax liability after you retire.