Do Taxes Drop In Retirement?

A common misperception in and around Greenville, SC, is that your taxes will drop when you retire and so will your overall expenses. This leads people to make the assumption that they require less money to live in retirement than they do at the current time.

In speaking with Matt Dixon, an experienced Registered Financial Consultant with a focus on tax planning for retirement, it is easy to see that this is not always the case. There are several factors that need to be considered before making the blanket statement that taxes and living expenses decrease when you stop working.

Retirement Goals

The first step in working with Matt Dixon is to develop your retirement goals. These are specific and include all things you want to do as an individual or a couple once you are no longer employed. For some people in Greenville, SC, this goal can include things they are not doing today, such as extensive travel, upgrading a home, or becoming more involved in philanthropy and giving.

There are no right or wrong retirement goals. However, unless you are clear on what you want to do, you may find you are using your retirement fund more than you anticipated, which creates a financial problem.

Tax Considerations

Matt Dixon provides specific support in understanding tax considerations now as well as in retirement. While it is true that your taxes may drop in retirement, this only occurs if your income drops. Passive income can keep you at your current tax bracket, and loss of tax deductions can also create a problem.

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