From worrying about whether you have saved enough money to hoping you don't incur a major healthcare bill, these and other issues could greatly impact how your retirement plays out. Couple these issues with taxes, and you've got a mix that will undoubtedly keep you up at night worrying about this and that.
While you may have read plenty about taxes and retirement, here are a few things you may not have known about but should regarding your taxes and retirement.
If you are not careful once you retire in regards to your provisional income, your Social Security benefits can be taxed up to 85%. Currently, if you are an individual making over $34,000 or a couple with at least $44,000 of income, expect the government to come calling with its hand out at tax time.
Once you turn 65, take advantage of the largest tax deduction to which you are entitled. If you are consulting with tax attorneys prior to or following your retirement, pay close attention to the standard deduction increases for individuals and couples, which are expected to be $1,300 and $2,600 respectively.
Even though you won't be able to continue making your contributions to a traditional IRA once you are halfway between ages 70 and 71, you can still keep on making contributions to a Roth IRA.
Like many people who retire, you may be looking to move from your current location to perhaps a new state. If you do so, make sure the destination you select is one that is very tax-friendly to retirees.
Social Security Can be Taxed
If you are not careful once you retire in regards to your provisional income, your Social Security benefits can be taxed up to 85%. Currently, if you are an individual making over $34,000 or a couple with at least $44,000 of income, expect the government to come calling with its hand out at tax time.
Take the Larger Tax Deduction
Once you turn 65, take advantage of the largest tax deduction to which you are entitled. If you are consulting with tax attorneys prior to or following your retirement, pay close attention to the standard deduction increases for individuals and couples, which are expected to be $1,300 and $2,600 respectively.
Keep Contributing to a Roth IRA
Even though you won't be able to continue making your contributions to a traditional IRA once you are halfway between ages 70 and 71, you can still keep on making contributions to a Roth IRA.
Actually, there are no age limits on this, meaning you can make contributions as long as you wish. Also, don't forget that only after-tax dollars are contributed to a Roth, with qualified distributions always being tax-free.
Choose Carefully Where You Live
Like many people who retire, you may be looking to move from your current location to perhaps a new state. If you do so, make sure the destination you select is one that is very tax-friendly to retirees.
For example, nearly 15 states impose taxes on Social Security benefits, while others have high income tax rates, sales taxes, and property taxes. If you're working closely with an attorney in planning your retirement, make this part of your discussion.
Rather than be one of the many who comes to retirement with more questions than answers, start planning as soon as possible to ensure your retirement goes exactly as you expected.
Rather than be one of the many who comes to retirement with more questions than answers, start planning as soon as possible to ensure your retirement goes exactly as you expected.
