When you think about retirement, you likely imagine freedom, travel, and enjoying what you’ve worked hard for—not taxes. But without the right planning, taxes can take more of your retirement income than you expect. From Social Security and pension payments to 401(k) or TSP withdrawals and investment earnings, taxes can reduce what you keep.
The good news is that with a smart strategy, you can hold on to more of your income. That’s where a retirement planning firm can help you make the most of your money.
Retirement Is Not Tax-Free
Many people believe taxes end when paychecks stop. But most retirement income—like withdrawals from traditional retirement accounts—is still taxable. Here’s what else you should know:
• Up to 85% of your Social Security benefits may be taxed depending on your income.
• Required Minimum Distributions (RMDs) can raise your tax bracket.
• Pension income is taxed as regular income.
• Investment income and capital gains may be taxed differently.
Without a clear tax plan, you may lose a large part of your retirement income to taxes.