There are five areas that boomer retirees need to carefully consider. The RMD tax can be 50% of your tax distribution so it needs to be considered. Some state have no income tax but most tax retirement distributions differently. The Retirement Earnings Tax needs to be considered when taking Social Security income. There is an earning limit, otherwise it can be taxed. There is a Medicare surcharge that will be applied to your payments if your modified adjusted gross income is over a certain amount. Account sequencing is also important because it will determine where to withdraw money from first. Retirees can save tax money by withdrawing money from the right source.
- In some states like Florida and Texas have no state taxes, but others such as Kansas will tax your social security.
- Medicare applies an IRMAA surcharge that may be reduced if you’ve had a qualifying life event.
- Check out the IRS actuarial tables to ensure that you aren’t overpaying on your RMD.
“No more pensions, rising health care costs and increased longevity all add up to a very expensive retirement that could last 10 years longer than their parents’.”