1. Your retirement plan withdrawals are likely taxable
Starting to save at an early age would be beneficial for a good retirement fund, but that also depends on your lifestyle and how much you’re able to put aside every month. You have to keep in mind that most retirement plan withdrawals are usually taxable. If you’re keeping your retirement savings in a 401(k) or an IRA account, take into consideration that the amount of money you want to withdraw is taxable.
2. Your Social Security May Be Taxed
When it comes to Social Security benefits, some retirees are luckier than others. For instance if any of your outside income goes beyond the limit of the Social Security Administration, 85% of it will be taxed.
If you are married and both of you are taxpayers, your situation will be a little bit different. There will be 4 types of taxes depending on your joint income:
- if your common income is somewhere between $25,000 and $34,000, more than 50% of benefits are going to be taxed
- for married filers the common income that will draw attention is around $40,000, and this may be taxed up to 50% of Social Security benefits.
- married filers whose combined income exceeds $44,000 will be taxed up to 85% of their benefits
