Why Taxes Still Matter in Retirement
Many retirees assume taxes won't be an issue after they stop working—but that’s far from true.
Social Security, pensions, retirement withdrawals, and even part-time income can still be taxable.
Understanding how taxes work after 60 is key to protecting your savings.
Top Tax Mistakes Retirees Make
- Not accounting for Social Security taxes: Up to 85% of your benefits could be taxable, depending on your total income.
- Withdrawing too much from retirement accounts: Large withdrawals can push you into a higher tax bracket.
- Forgetting about Required Minimum Distributions (RMDs): After age 73, you must take RMDs or face a 25% penalty.
- Ignoring state taxes: Some states tax pension income and IRA distributions.
- Missing healthcare deductions: Out-of-pocket costs may be deductible if they exceed 7.5% of your income.
How to Lower Your Tax Burden in Retirement
Smart planning can help reduce your overall tax bill:
- Use Roth IRA withdrawals (tax-free) strategically alongside taxable income.
- Convert traditional IRAs to Roth in lower-income years.
- Track medical expenses carefully to qualify for deductions.
- Take advantage of the senior standard deduction (higher than regular deduction).
- Consider charitable Qualified Charitable Distributions (QCDs) from IRAs to offset RMDs.
Estimated Tax Thresholds for Seniors in 2025
| Filing Status | Standard Deduction (65+) | Taxable Income Starts At |
|---|---|---|
| Single | $15,700 | $15,701+ |
| Married Filing Jointly | $30,700 | $30,701+ |
Helpful Tips to Stay on Track
- Work with a tax professional who specializes in retirement income.
- Review your tax situation each year as your income sources change.
- Use free senior-focused resources like AARP Tax Aide.
Visit IRS Retirement Tax Tools to learn more and avoid unnecessary penalties.
Final Thoughts
Retirement doesn’t mean you're off the hook for taxes. With the right guidance and a little planning,
you can avoid costly tax mistakes and make the most of your hard-earned money.
Check your retirement tax strategy here and stay financially confident for years to come.
