What kind of taxes should you expect to pay during retirement?
Some people wonder, “Will I pay taxes in retirement?” The answer to this question is not as straightforward as some people think. In short, yes, you will pay taxes on any earned income. So, unless you have no income, you still have tax responsibilities. However, what people might mean by that question is something along the lines of “What can I expect to pay in taxes during retirement?”
If you have a brokerage account that has gains over the years, and then you sell things in that brokerage account, then you’ll pay capital gains tax on what you gained. Another tax you might have to pay would be an income tax on your IRA withdrawal. You will also pay income tax on some parts of your Social Security benefits. However, how much depends on your total income. Furthermore, if you’re working part-time in retirement, then your paycheck gets taxed as well. So, you will likely still be paying taxes in retirement. The only way to avoid it would be to have everything in cash and maybe a Roth IRA because Roth IRAs can be withdrawn tax-free.
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Casey Smith
President, Wiser Wealth Management
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