When it comes to your retirement income, it’s important that you understand how it is taxed. Many different retirement income sources are taxed which include any income you make from investments, a portion of your social security benefits, and some of your pension income. A great way to help minimize your taxes while you’re retired is to invest in a Roth account as they are not taxable during retirement. Finally, some states have much friendlier tax policies than others so it might be beneficial to relocate during retirement.
Key Takeaways:
- When it comes to determining your tax bracket you need to understand what your filing status is and what your taxable income is.
- There are many sources of retirement income which is taxable including investments, social security benefits, pensions and 401Ks.
- The best way to minimize the amount of taxes you will pay in your retirement is to invest in a 401K account because they aren’t taxable while you’re in retirement.
“Understanding the tax rules applicable to retirees is important even for younger Americans because many decisions to reduce your future tax bill need to be made early.”
Read more: https://www.fool.com/retirement/taxes/
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