For retirement planning, one of the important financial questions is the question of taxes. Not every income is taxable and not every state tax that income at same levels. Understanding the implications is important, because it is the taxes that determine the level of disposable income you will have on hand. Social Security is common source of income many retirees count on. Depending on your status when you file for taxes and your income, the taxable portion will vary. In general, income from tax deferred accounts is also taxable.
Key Takeaways:
- The sources of your retirement income and how much retirement income you draw each year will determine your taxes in retirement.
- It’s imperative that you understand how your retirement income will be taxed. If you’re still working, knowing this information will help you figure out how much you need to save.
- The “combined” in combined income is where things can get confusing. It consists of your adjusted gross income, your nontaxable interest income, and half of your Social Security benefits.
“In reality, there is no federal government Social Security account with your name on it, and you don’t get back the same amount you pay in.”
Read more: https://www.investopedia.com/articles/retirement/12/will-you-pay-taxes-during-retirement.asp
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