What are some examples of tax traps in retirement years?
One, not understanding that eighty-five percent (85%) of your Social Security benefits can be subject to income taxes.
Two believing that there is no way to minimize taxes in retirement.
Three, withdrawing funds from different accounts in the wrong order.
Four, making a lot of taxable money within two years of the retirement age (66) or in one year during retirement.
Five, failing to understand that costs for Medicare Parts B and D are subject to increased premiums based on crossing certain Modified Adjusted Gross Income (MAGI) amounts.
Some of the increased premiums are draconian. Not understanding the tax code can be detrimental to your financial health in retirement.
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