Have you ever heard the saying, “You will pay less tax in retirement”? Well, most of our clients do not pay less tax in retirement. They pay more.
The main reason is that, in retirement, they have Social Security and required minimum distributions (RMDs) from their tax-deferred investments (IRAs, 401(k)s, etc.). If the tax-deferred investments have significant value, combining the RMDs and Social Security income can result in what is called the “tax torpedo.”
Written By: Joe F. Schmitz Jr.
Published By: www.kiplinger.com