No matter your line of work or saving/investing strategy, it’s likely that taxes are a constant point of emphasis when considering your finances. One of the downsides of retirement is that even when the work stops, taxes will remain.

Depending on where your retirement income will be drawn from, there are tax implications that may be new to you. Staying informed on how your tax bill can be affected can help you optimize your income and spending strategy in retirement.

Common taxes associated with retirement include:

• Required Minimum Distributions (RMDs) – Once you reach age 73 (or 75 depending on your birth year), you’re required to begin withdrawing from traditional IRAs and 401(k)s. These withdrawals are taxed as ordinary income and can significantly increase your tax bill if not planned for properly.
• Social Security Benefits – Up to 85% of your Social Security benefits may be taxable¹ depending on your total income, including investment earnings and RMDs.
• Capital Gains and Asset Sales – Selling long-held investments or downsizing your home can trigger capital gains taxes and potentially push you into a higher tax bracket, affecting Medicare premiums and Social Security taxation.
• Pensions and Annuities – Income from pensions and qualified annuities is taxed in the year it’s received. This reduces the amount available for spending and can affect your overall tax bracket.
• Estate and Legacy Planning – Gifting strategies, charitable donations, and legacy planning all have tax implications. Being proactive can help preserve wealth for heirs and causes you care about.

Speaking with an experienced professional is a great way to gain a firm grasp on how your money might move in retirement. Call us at 678-539-9518 and start building your plan today.

1. https://www.irs.gov/newsroom/irs-reminds-taxpayers-their-social-security-benefits-may-be-taxable

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This blog is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual’s situation.