With Social Security being a major part of many people’s retirement income, paying less in taxes on this valuable benefit is like getting a raise. Put another way; you should be concerned about how much taxes you will owe on your retirement income, including your Social Security. What may seem like a good amount to live on may not seem so fabulous after taxes.
Depending on your total income in retirement, the IRS may take a cut of your Social Security benefit via federal income taxes. The news is a bit better at the state level depending on where live during your retirement. Currently, 37 states, soon to be 38 states, will not tax your Social Security benefits at the state level. That leaves 13 states, soon to be 12, that will be taxing your Social Security benefits at some level.
While probably not a big enough issue to warrant moving in retirement, it is something to consider when choosing where you want to spend your golden years. At the very least, you need to know about Social Security taxation when figuring out how much additional income you will need to have in order to maintain your standard of living during retirement…Read more>>