Taxes may affect your retirement income—and probably different than you might expect.
Tax planning for retirement means looking at your finances—present and future—in a new light. For most of your working life, you’ve probably been in earning and saving mode. Once you retire, that likely switches to spending mode, where the tax implications are completely different. Some of the critical considerations include:
- Taxes on Required Minimum Distributions.
- How the timing of your Social Security benefits could increase your taxes.
- How taxes affect your Medicare benefits.
- How the IRS taxes each of your various types of income.
Unexpected post-retirement taxes can catch you off guard with costly fees that cut into your retirement savings. Imagine being taxed on up to 85 percent of your Social Security benefits. That’s currently a real risk, and one you may avoid with effective tax planning for retirement—and don’t wait until you’re retired to make your plan.