When I retire what taxes should I expect?

Question

When I am ready to retire and am at an age when there is no penalties for withdrawing my money, what taxes should I expect to be hit with?

I would also like to know the low, median, and high tax bracket (percenatage) I could end up in if anyone knows.

I do not live in a state with incomet tax either.

Thanks you!

Answer 1

You can withdraw from an IRA or 401K at 59-1/2 without penalties. Once you turn 70-1/2, you MUST withdraw a certain percentage each year. The amount you withdraw is taxable, if the money was put in pre-tax. Withdrawals from a Roth IRA are not taxable.

Your social security might or might not be taxable, depending on your other income. The most that would be taxable is 85% of what you get, not all of what you get. There's a fairly complicated formula to figure how much of your social security is taxable.

If you get a pension, it's taxed as ordinary income, just like your salary was. And any other income you have, like interest or dividends, is taxed just like it was before you retired.

If you're 65 or over, you get a slightly higher standard deduction than you do if you're under 65.

From there, taxes work just like before you retire. You add up all your income, subtract any adjustments, exemptions and deductions, then the tax calculation is the same as before. Brackets range from 10% to 35%. If you have long term capital gains, you get a break on the percentage tax you pay on those.

Answer 2

When you are 70 1/2 you can draw your money out without penalties, but you will be taxed on it. I don't know the exact percentage. You usually will pay about 10% federal tax, so you can determine how much you would want to get out each month.
Also you can just draw your interest and come out better if you have an additional income. Wish I could help you more.