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Aug 21, 2020

Sometimes, we talk about the “myths” of retirement.  And Forbes says one of the most common ones is that we’ll be in a lower tax bracket, when we quit working.  That certainly seems to make sense – why would it not be true?

• It makes sense why people believe this.  They don’t see themselves paying more in taxes because they’re no longer earning money; rather, they’re now living off what they’ve accumulated over a lifetime.  And with their income being lower than it was during their working years, the amount they’ll owe to the IRS will be less, right?

• For a short time after they finish working, many successful retirees typically are in a lower tax bracket. But that window can shut quickly.  Once required minimum distributions (RMDs) kick in, in combination with other forms of income (investments, social security, pensions, etc.), successful retirees will quickly move into an equivalent tax bracket as they were in during their working years.  They may also be pushed into Medicare surcharges and other ancillary tax.

• By their mid- to late-70s, it’s not uncommon to see these successful retirees be in even higher brackets than they were during their working years—a far cry from what they envisioned.

Interested in a Tax Free Retirement? Then contact Steve today for a complimentary Portfolio Tax Analysis to make sure YOU'RE on track with your retirement income planning!