Fri, 21 February 2014
Is there such a thing as a “Retirement Tax Bracket”?
It is important to plan for and remember that when you take money out of a 401k or IRA, 100% of that withdrawal is counted and taxed as ordinary income. The entire amount counts toward the tax calculation.
If you haven’t planned for the cost of taxes during retirement it could potentially cause you some big problems. If taxes go up you could pay more in taxes. If you need a large chunk of your own money for emergencies or just to use as you choose – you could end going into a higher tax bracket and getting hit with the full force of the U.S. tax coded. You could be faced with tax rates of 25% to 39% depending on your income and withdrawals during retirement.
A better approach is to take a balanced approach and save into taxable and tax free vehicles. You might not want to go all in on deferring the taxes you until retirement.
Indexed life insurance can be a great way to create tax free income. It is low cost long term and can allow you to access money before age 59.5 if you want to retire early.
You can learn more about creating taxing free income at http://wealthforlife.net
Call us anytime with questions: 480-970-5663
Email Denver Nowicz at Denver@wealthforlife.net