July 22, 2022

When is the last time you sat down to look over your retirement account? What about the last time you sat down with your financial team to review the information and discuss your alignment with your financial goals? If it’s been some time, you might want to consider your current retirement withdrawal strategy and what this means for you in terms of taxes.

Depending on the retirement account types you’re using, you might have tax implications in the future. Knowing how to calculate these numbers properly will help you determine what’s in your best interests and ensure that you still have a comfortable retirement. 

Many people may be surprised to learn that they might still owe taxes on Social Security benefits even if you paid into Social Security during your working years. If your income as an individual is between $25,0000 and $34,000, or if you’re a married couple filing jointly and your income is between $32,000 and $44,000, up to 50% of your benefit could be taxed. If your provisional income as an individual is over $34,000, or you’re married filing jointly with provisional income over $44,000, as much as 85% of your benefit could be taxable. 

Too many people with significant retirement savings or income during retirement don’t know their tax situation going in, but working with a team of financial experts can help give you confidence. We can help you figure out what meets your needs most appropriately.

Inflation could easily push you over this amount and trigger this tax. This is why it is extremely important to work with qualified financial professionals and to ensure that you have considered which aspects of your estate plan might need to be repurposed as income during retirement. This can be a very difficult question to answer and one that should only be handled by a team of qualified professionals. The right estate planning lawyer can tell you more about this process and help you to answer the important questions to develop strategies to protect your interests.