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.