5. Municipal bond interest
A municipal bond is basically a loan provided to your local or state government in order to fund public projects such as roads and hospitals. The interest made from such loans isn’t taxed, and this is why municipal bond interest is a great way to enjoy a tax-free income in retirement.
In fact, financial advisers often persuade their clients to opt for municipal bonds when they are close to retirement. Also, you can always reinvest your tax-free interest income when it comes to achieving tax-free compound interest.
For example, if you opt for a standard taxable investment account, the rate that’s usually between 30 percent and 35 percent can easily drop to 10 percent.
