Women, taxes and Retirement Income: Lower tax bracket in retirement?
Many women enter retirement not thinking about the impact of taxes on their retirement income. Or they assume that they are going to pay less taxes in retirement. This is an antiquated thought. Taxation is very important to consider when planning your income in retirement. And there are certainly misconceptions about taxes in retirement.
Many could feel that they’re going to pay less taxes in retirement because they think they’re going to spend less money. Or since they’re not earning a paycheck, there’s no taxes to be paid. Or because the mortgage is paid off, that reduces the income needed in retirement.
While some of those statements may be true, I am here to bust that myth and explain why assuming you’re going to be in a lower tax bracket in retirement is a mistake. I can say with confidence that you should plan on paying the same amount of taxes, if not more, in retirement.
Below are topics I discuss with my clients as they are preparing for retirement.
Federal tax break
One benefit for Senior Citizens is that you are allowed a larger tax deduction for your federal tax. When you’re over 65, the standard deduction increases. The specific amount depends on your filing status and changes each year. For the 2022 tax year, it is $14,700. Taking the standard deduction is often the best option and can eliminate the need to itemize.
I have been the only woman in a room of men in dark suits.
It can be intimidating.
My goal is to create an environment of comfort and openness for my clients.
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