================================
Sign up for email list here.
LET’S SOCIALIZE!
Linkedin:
My course “Can I Retire” will help reduce your stress when it comes to retirement planning.
Get it here:
and don’t forget there IS a 30 day money back guarantee if you’re not satisfied!
Get my books on Audible here:
Want to support what I’m doing for $10 a month?
Join my SubscribeStar page!
My Amazon Product page:
Anything you buy there Amazon pays me a commission. Much appreciated!
GET MY BOOKS:
ALL are FREE to Kindle Unlimited Subscribers!
You Can RETIRE on SOCIAL SECURITY:
The Tax Bomb In Your Retirement Accounts: How The Roth IRA Can Help You Avoid It:
Strategic Money Planning: 8 Easy Ways To Put Your House In Order
GET ALL MY LATEST BLOGPOSTS:
…(read more)
LEARN MORE ABOUT: IRA Accounts
CONVERTING IRA TO GOLD: Gold IRA Account
CONVERTING IRA TO SILVER: Silver IRA Account
REVEALED: Best Gold Backed IRA
Retirement is a time when you are no longer working and earning a regular income. Instead, you will be relying on savings, investments, and government retirement benefits to support yourself. However, you should be aware that your retirement income may still be subject to taxes.
The amount of taxes you will pay in retirement depends on many factors, including your income, the source of your income, and where you live. Some states have no income tax, while others have high taxes. The following are some things you should know about retirement taxes.
Social Security Taxes
If you are receiving Social Security benefits, whether you will have to pay taxes on your benefits depends on your income. To determine this, you need to calculate your provisional income, which is the sum of your adjusted gross income, tax-exempt interest, and half of your Social Security benefits. If your provisional income is below a certain threshold, your benefits will not be taxed. However, if your provisional income exceeds the threshold, you will have to pay taxes on a portion of your benefits.
Pension and retirement account Taxes
If you have a pension or retirement account, whether you will have to pay taxes on your distributions depends on the type of account you have. If you have a traditional IRA or 401(k), your distributions will be taxed as regular income. If you have a Roth IRA or Roth 401(k), your distributions will not be taxed. You will still owe taxes on any investment earnings and contributions you made to any traditional IRA accounts.
Investment Taxes
If your retirement income comes from investments, you may have to pay taxes on your investment income. This includes interest, dividends, and capital gains. Short-term capital gains are taxed as regular income, while long-term capital gains are taxed at a lower rate.
State Taxes
The amount of state taxes you will pay in retirement depends on where you live. Some states have no income tax, while others have high taxes. Some states also offer tax benefits for seniors, such as lower property taxes or exemptions on retirement income.
Conclusion
In conclusion, the amount of taxes you will pay in retirement depends on multiple factors, including your income, the source of your income, and where you live. Understanding retirement taxes and planning accordingly can help ensure that you have enough money to support yourself throughout your retirement years. You should consult with a tax professional to help you manage these obligations.
I’m single and didn’t know I was going to be paying 24%. I guess it was tax deferred up till then but it almost makes me think I should get married.. lol
Man it is crazy to think if you have 2.3 million you are classified as top 1% And I guess this includes billionaires that pump up the average to that.
some years we will pay a little tax, others we won't pay any.
my mix of SEP and Roth accounts should allow me to manage a -0- (ZERO) tax rate. I guess I am not that special after all
If your working income has you above the 12% marginal tax rate you should contribute pretax to 401k/IRA. Especially if you don’t have a pension. If you retire at 62 it gives you 10 years of Roth conversions plus 8 years before claiming social security.
OK Josh…hypothetical…… Let's say a person will have ~$2.5M saved for retirement (401K + pension). Let's also say, the company they work for recently started a ROTH 401K (2-3 years ago). Up until then, they were contributing pre-tax to limit and then post-tax so they could do a backdoor ROTH IRA. When they retire the lump sum pension will be rolled into the traditional IRA. Let's say their idea is to get as much into the ROTH IRA as possible and then invest in CEF's paying a monthly dividend with the goal of generating ~$4 to $5K a month on top of $3200/month SS.
Correct me if I am wrong but that dividend income would be tax free since it is being generated by the ROTH. Now, if this person is taking ROTH dividend distributions, will they still need to take out a minimum from their traditional IRA at 72? Again, hypothetical.
I find it hard to believe that anyone (retiree, assume Americans) with retirement savings above $1M is in the top 5%. That's just poor financial stewardship on Americans.
haha! chain around the neck. can't wait to cut those chains!
I suppose the takeaway is to get married as soon as possible after a spouse dies!
I would link the taxes to income instead of assets. Another study has shown that 15% of all retirees have an income of over $100K, and 5% have an income over $200K. These incomes do not match the assets shown in the charts – are people getting pensions, or do they have more assets than they are letting on?
So basically Roth conversions are a total waste of time and money for most people
Hey Josh, what are the top 1% doing in the chart, that the top 3% are not? Top 3, Single is 24.8 in the chart and Top 1 is N/A — what do we need to do to get to the N/A? :))
As a single person I'm trying to bulk up my Roth assets to use as a flexible hedge during my later withdrawal years to limit tax triggers. Pre-tax 401k will still have the lion's share however. Not a bad thing per se as I plan on using this to "retire" at 55 and use withdrawals to dial in income for ACA plan to max subsidies & limit taxes. Early "retirement" years can be subsidized by cash savings and taxable 401k withdrawals that gradually increase over time as I approach age 65 (or not if I do some part time work).
I've just about decided to "hit just past the middle" when it comes to the timing for filing for SSA (file at 65+2 months, FRA is 66+10) – doing this bumps up monthly amount by $500 and added to spousal benefit is about what our monthly cost of living is. Considering April 2022 for retirement from COJ & using some IRA funds to live off of for about 30 months and skim off this fund with a bit higher percentage to continue building up cash bucket (18 mos living expenses already there) and filling out the 12% bracket. Wifey never got close to having any SS credits, so the spousal benefit is a sweet deal.
Once I retire the only tax i'll pay is for the bridge years to social security. One of the few benefits of being low income saver.
"Nowhere here other than right here do you pay 25%."
Hello.
All It Takes Is A Little Planning. First Full Year In Retirement I Was Able To Fully Mitigate Tax Liability, On Pace To Duplicate This Year. Unfortunately, Like Another Poster Below, RMD's Will Probably Negate All I've Done.
I’m a bit confused. When I’m looking at the chart does the second column (assets:) reflect 1) annual social security, pension, as well as non Roth retirement account withdrawals or 2) total assets in retirement accounts? I don’t know much about how retirement taxes work, but my assumption is that I would be taxed only on what I get that year from social security, pension and any non Roth withdrawals and what remains in accounts doesn’t get taxed. If this assumption is true, then the question is how much married and single income is needed for which tax rate (although I’m sure there are variables when considering this number)?
There is a "ROTH" way of doing things…it just makes you look poor so that you don't have to pay any tax ever. Comes with a bunch of other benefits too….and best of all it doesn't matter if you are still filing jointly or one of you just vanished for good.Josh can we expect a deatailed "estate planning" video from you anytime soon?
Im not sure I am reading this correctly. Is the second column assets or income? It states assets. I thought you were taxes on income? If I am married, have 65k pension, another 50k in annual dividends or 401k withdrawals, and combined SS of 60k……..my income will be 175k right? Even after deductions Im going to pay at least 22% married, correct? What am I missing?
Is that a case Not to have an annuity? Social Security and monthly annuity payment together would raise the taxable income. Without the annuity I could have more control of my annual income. Is that a good way of thinking about it?
Scary to see how low the assets are for retirees
With our annual combined SSA of $43k being the majority of our income combined with a comfortable living with under $50k of expenses (NO MAJOR DEBT), our $800k in retirement accounts will have an annual withdrawal rate of less than $20k annually until RMD starts in 7 years. Running various scenarios on my 2020 Turbo Tax, our overall tax rate should be negligible in the coming years
And the bottom 50% that pay 0% will complain the top 1% don't pay their fair share. I think the word "fair" is one of the most abused words in politics.
I'm planning to retire with similar income. My taxes have been going up since kid#1 left home and I expect more taxes to come. I don't see myself paying less, especially with significant pre-tax savings. Will probably delay SocSec and try to spend down the pre-tax and/or convert more to Roth.
Look forward to the video.
I am in my 40s, will be in the 5%, looks like I will have a pretty big tax bill later on. That stinks for singles.
if only we could project what will happen in the future.. I'm sure taxes will go down 😉
I'm going to pay taxes in retirement….