So much of the retirement advice you hear is focused on how much to save and what to invest in. But if you're a truly smart saver, you'll also pay attention to how your savings and investments are taxed, both now and in the future. That way, you can help maximize your retirement income while minimizing what you owe to the government.
Part of this retirement and taxes strategy will likely include putting your money in various types of retirement accounts or investment vehicles that are taxed differently. The thinking behind this is similar to why you might diversify across a variety of stocks and bonds in your portfolio: Because you're not putting all your eggs in one basket, you're better able to minimize losses if one type of investment experiences a downturn.
In much the same way, by not relying on just one type of retirement savings vehicle, you're not limiting yourself to one type of tax treatment — and thus have more flexibility to take advantage of the features, benefits and tax characteristics different types of retirement vehicles can offer. The more options you have, the more strategic you can be in your retirement planning and ultimately help minimize your tax bite.