Are you planning for these possible tax consequences once you're retired?
While you’re working, you understand that you’ll be paying taxes. What you might not realize is that you’ll still be paying taxes in retirement, only they’ll be different.
Be aware of these possible tax consequences in retirement:
- Social Security. Depending on your income in retirement (such as retirement account withdrawals, dividends, capital gains, etc.), you may need to pay federal taxes on your Social Security benefits. Some states also tax these benefits, but Wisconsin does not.
- Employment income. Anything you earn from side gigs, part-time or full-time work, etc. is still taxable and is added to your income total from retirement fund withdrawals, annuity income, and Social Security benefits.
- Retirement accounts. If you made 403(b) or IRA contributions with pre-tax dollars before retiring, you will have to pay taxes on the funds you withdraw.
- Required minimum distributions (RMDs). At age 73, the IRS currently requires you to take out withdrawals (RMDs) each year. Even if you don’t need the income, you still need to take RMDs, and you’ll be taxed on the withdrawals as income.
Taxes don’t stop in retirement, but they do change. If you want help with tax and withdrawal strategies in retirement, make an appointment with one of our financial advisors by calling 1-800-279-4030.