Weekend Reading: 12 Questions Retirees Often Get Wrong About Taxes in Retirement

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
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Weekend Reading

Taxes can pose one of the biggest threats to your lifelong savings, especially if you’re not apprised of exactly how and when Uncle Sam claims his cuts.


Thankfully, checklists such as this exist, so be sure to brush up your knowledge on retirement tax planning, including in areas such as:

📌Tax rates in retirement – Many pre-retirees believe they will fall in a lower tax rate once retired. While that is true for some, others might find they owe more in taxes due to no longer having certain tax deductions, greater expenses from travel and hobbies, or – the simple reality that tax rates are on the rise.

📌Taxation of Social Security benefits – Based on your “provisional income”, up to 85 percent of your Social Security benefits can be taxed. This is why creating a Social Security filing strategy and understanding how taxation could affect your retirement income plan is key.

📌Withdrawals from Roth IRAs – Because taxes on Roth contributions are paid upfront, these retirement savings vehicles offer long-term tax advantages, as withdrawals are tax-free once you retiree.

📌Estate tax threshold – In order to face federal estate taxes in 2021, your estate worth at death must have been at minimum $12.06 million (at least $24.12 million for married individuals filing jointly). However, the 2017 tax reform law is scheduled to drop these amounts, and additionally, some states also implement their own estate taxes.

Two heads are better than one: There’s a lot for you to know when it comes to taxes. If you overlooked just one of these, it may illustrate the importance of a team approach when it comes to your retirement plan.