People often pay more taxes in retirement than expected because a confusing system treats various income types differently and contains hidden taxes and penalties.
In the accumulation phase, people build their assets in several different forms – stocks, bonds, real estate, pensions, 401(k)s, IRAs, and more.
In the distribution phase, your regular wages stop coming in. You have to take the money you’ve saved and use it to fund your retirement, which can go on for decades with good health on your side.
That’s challenging because you’ll need to make informed decisions about the tax implications of tapping different accounts and it can be costly. In retirement, your tax rate can vary dramatically based on decisions you make, such as the timing and order in which you use different sources of money to pay for your expenses.
Poor choices through misunderstandings or ignorance of the rules can result in people paying more taxes than necessary. As a result, they may see their savings drop faster. And that can mean you outlasting your money or less to leave to the kids and the grandkids.
Be prepared to enjoy your retirement savings—not spend it on unnecessary taxes and penalties because of bad choices.
Have questions? Call us at 208.576.6668 or email us at info@integrityofidaho.com to get answers!