I have a plan to minimize the impact of taxes and inflation throughout retirement.
Most people have a fairly good grasp of their tax situation while they are working. Although this is definitely a good thing, it can create the illusion that you understand how taxes will work in retirement. Most federal employees don’t realize, or fail to appreciate, how their taxes will change – or not change as they expect them to – in retirement.
Paying taxes is rarely simple, but it tends to get even more complex as you retire. You will not stop paying income taxes just because you quit working. In fact, you may have to pay taxes on monies withdrawn from certain retirement accounts. Most federal employees also have to pay federal income tax on a portion of their Social Security benefits.
You plan for uncertainty through diversification. The takeaway is everyone’s financial situation is unique and the tax system is difficult to navigate successfully. You may want to consider working with a tax professional and financial professional who are knowledgeable about federal benefits in order to minimize the bite that taxes may take out of your retirement savings.
To help you gather even more information on this topic, please see our web site:
Tax Bracket Basics
Taxes in Retirement