Calculating Your Retirement Tax Rate

When the time finally comes for you to retire, it’s easy to feel like responsibility has left you. After all, you no longer have to show up for work every day, and you can often make your own schedule for the first time in years.

However, there is at least one responsibility that doesn’t go away, and that’s paying your taxes. Almost all people will have to pay taxes in retirement, which is why it’s important to understand and carefully plan for retirement tax rates.

Calculating Your Tax Rate

Retirement rates vary widely from one person and situation to the next, which is why it’s always a good idea to have some professional tax help where you can.

In general, your tax rate will depend on how much income, if any, you’re still bringing in and any deductions or exemptions that may apply.

Keep in mind that income does not always mean money that you bring in through traditional work but may include income you bring in via other means, such as retirement funds that are not exempt. If you’re unsure what counts as income, ask a professional tax advisor for help so that you don’t find yourself in trouble for not reporting income and/or paying required taxes.

When Your Tax Rate is Too High

Many people in retirement find that their tax rates are much too high for them to live comfortably and worry-free.

If this happens to you, don’t panic. Consult a tax professional to find exemptions, deductions, and other methods to lower your tax rates and to help you enjoy your retirement the way you should- free of excessive burdens and concerns. The goal is to leave that all behind when you retire, and the right tax help can often enable you to do just that.