Planning for Your Retirement

Last updated on May 27, 2023

When you are planning for your retirement you must take taxes into consideration, because they heavily impact your savings and income. Your income is taxed when you save it for retirement. As long as you do not withdraw from your retirement early (before the age of 59 ½), your withdrawals will typically not be taxed.

Experts say that most people require 80% of their pre-retirement income to support themselves after retirement. Most people plan their finances considering the tax rate, but the amount of taxes you will need to pay after retirement might not be as much as one might expect. Future tax increases may not affect your tax bracket because the increases may be limited to the higher tax brackets. Moreover, your present income is most likely spent to fulfill liabilities that will no longer be there after you retire, such as supporting your children.

When planning for your retirement, you may consider the changes in your lifestyle and especially in your liabilities that will impact your expenditures. You may also consider the benefits you may receive after retirement that are not available to you at present.

Migrating to a tax-friendly state may be a good idea if you believe it will help you to lead a better life after retirement. Planning for your retirement now and considering the various choices available to you presently and in the future will help you to lead a more wholesome life now and after retirement.