Tax Planning Shouldn’t Be an Afterthought
There are so many elements of a comprehensive retirement plan, such as claiming Social Security, investing, planning for long-term care costs and estate planning. The one thing they all have income is taxes. Tax planning touches on every element of one’s financial plan, which is why it should never be an afterthought.
The first thing to realize when planning for retirement is that taxes don’t stop when you stop receiving a paycheck. Taxes could still be one of your biggest expenses, which is why you need to integrate tax planning into your overall financial plan.
How Will Your Retirement Income be Taxed?
Although you paid into Social Security during your working years, you. If your provisional income as an individual is between $25,000 and $34,000 or is between $32,000 and $44,000 as a married couple filing jointly, up to 50% of your benefit may be taxable. If your provisional income as an individual is over $34,000 or over $44,000 as a married couple filing jointly, up to 85% of your benefit may be taxable. Note that these income thresholds , and there are no current plans to adjust them with inflation. If you’re near this threshold, consider that inflation could push you over and trigger this tax.
