Paying income tax in retirement affects your retirement plans significantly. If you plan on spending a specific amount of money – say $100 – you may be left with much less after paying your income taxes.
While it’s impossible to entirely avoid taxation on your income, anticipating these tax burdens can help you minimize income taxes in your retirement. Below is a highlight of investment and withdrawal strategies that form the basis for tax planning for retirees.
Income tax has essential implications on one’s quality of life in retirement, and there are a few pieces of common misinformation about taxes in retirement. Misinformation about income tax before or during retirement could become an expensive mistake to a retiree. Often this misinformation leads to miscomputations and, upon realization, your retirement plan is thrown in disarray. Here are some of the common miscomputations about taxes in retirement: