Planning for retirement is the most critical financial action you can take. Many Americans are not as prepared for retirement as they should be, and if you still have some time to prepare, it is important to make this a priority. Assuming you are close to or already entering retirement, it is also important to have a strategy to keep your tax liability to a minimum. Otherwise, too much of your hard-earned dollars will be given to the government.

Here are four effective strategies to keep more of your money during retirement:

1. Enter Retirement with Low Expenses

Staying within the 10% or 15% tax bracket during your retirement years will offer numerous tax benefits. This means keeping your retirement account distributions to a minimum. To accomplish this, however, you need to be sure your expenses are low as well. The best way to ensure your expenses are low is to retire all your debts. Make it a goal to have your mortgage and car loans paid off and to wipe out any credit card balances; this way, your only expenses will be the essentials, such as utilities, food, fuel, clothing, etc.

2. Take the Minimum Required Distributions (MRDs) from Retirement Accounts

When you reach the age of 70.5, you are required to withdraw a certain amount from your IRAs, 401Ks, and other retirement accounts each year. If you have followed step one, you will be able to take minimum distributions from each account. This is important because you not only want to stay in the 10% to 15% income tax bracket; you also want to minimize the amount of tax you pay on your Social Security benefits. There are several formulas that determine how much of your Social Security income is taxable, based on your tax bracket, filing status, and the tax year in question. Bottom line: the lower your income from other sources, the less you will have to pay on your Social Security benefits.

3. Take Withdrawals from Taxable Retirement Accounts First

Hopefully, you will enter retirement with both taxable retirement accounts and those that are tax-deferred or tax-free. For example, you were able to contribute to your traditional IRA or 401K account pre-tax during your working years; this helped reduce your tax liability at the time. During retirement, however, the distributions from these accounts are taxable. On the other hand, Roth IRAs and Roth 401Ks are funded with post-tax dollars, but retirement distributions are tax-free.

According to most professionals, the best rule of thumb for retirement is to withdraw from the taxable accounts first (following the guidelines from the previous steps of course). This is because you want to hold on to your tax-free dollars for as long as possible. Later in your retirement, you may encounter some unexpected health challenges and/or other surprise expenses. The last thing you need at this point in your life is a major tax bill.

4. Liquidate Assets when the Opportunity is Right and Your Income is Low

If you have stocks, real estate and other investments, you can sell them without paying capital gains taxes as long as you are in the 10% or 15% tax brackets. So if you are following the aforementioned strategies and see an opportunity to make a nice profit on an investment, you should be able to do so free of capital gains tax.

There are several other ways to minimize your tax liability during retirement. The best strategy is to consult with a local tax professional to discuss your specific circumstances and how to put yourself in the best possible financial position.