While you are working, the taxman has you at his mercy. You can take advantage of tax-deferred accounts and pension plans but after that you have little defense.

When you are self-employed, you have more options available. When you retire, the situation changes dramatically and you can have a great deal of control over your taxable income and tax bill.

Social Security benefits become taxable according to a complicated two-tier formula at up to 85 percent. Once you go over the lower tax threshold, benefits begin being taxed at 50 cents on the dollar and once over the second threshold at 85 cents on the dollar, up to a full 85-percent of benefits. Therefore, if you are paying tax on your Social Security benefits, a reduction in your regular income can result in a decrease on the taxability of your Social Security benefits. Tax-deferred annuities are often used to reduce taxable income and the tax on Social Security benefits since gains don’t become taxable until withdrawn.

Municipal bond interest reduces taxable income but does not reduce taxability of Social Security benefits. Minimizing withdrawals from regular IRAs until you reach 70-1/2 years can also reduce benefit taxation.

You will want to discuss tax saving strategies with your financial advisor and tax preparer.

Sometimes taxpayers will purchase immediate annuities that pay guaranteed income to the end of their lives (and the end of their spouse’s lives if they are married). An added benefit is that a portion of each payment is tax-free since it is considered a return of principal.

There is one variable annuity I am aware of that has a guaranteed income provision whereby a portion of each payment is also considered a tax-free return of principal.

I am beginning to see many taxpayers who invest money in special life insurance policies designed as income vehicles whereby they can grow their money when the market goes up, while avoiding losses when the market goes down. After their money has grown, they can take out their gains without tax via interest-free loans. This is a strategy you may want to discuss with your financial planner to learn the details.

Taxpayers who have invested in ROTH-IRAs are able to withdraw from them tax-free vs. regular IRAs that are ordinarily 100-percent taxable.

If you have a ROTH-IRA, you will want to strategize with your tax professional and financial planner to use the ROTH-IRA withdrawals to potentially lower tax on Social Security income.

Many taxpayers postpone taking Social Security at the full retirement age of 66, while letting their future Social Security benefit increase until age 70. If you don’t need the income immediately, this can increase your benefit by up to 32 percent while saving on taxes.

Sometimes a taxpayer will file for a spousal benefit of 50 percent of their spouse’s Social Security benefit while allowing their own to increase to the age of 70. The Social Security Administration has a good website guiding your options, but you will probably also want to talk with a financial planner who specializes in retirement planning.

With the many tax-saving opportunities available to retirees, you will want to adopt a strategy that not only maximizes your income, but minimizes your tax liabilities.