No retirement decision should be made without first considering the tax impact that decision could have on the overall retirement strategy. In this Retirement Daily article, Tax Rates and Retirement: What You Need to Know, Covisum® Founder and President, Joe Elsasser, CFP® outlines the different tax rates that determine how much you'll pay in taxes throughout retirement.
"You are probably at least somewhat familiar with the term marginal tax rate; it’s also sometimes referred to as a tax bracket. The United States uses a progressive tax system. The more income you have on your return, the higher the rate you’ll be taxed at. While this may seem relatively straightforward, if you take your total taxes and you divide that by your total gross income, you're rarely going to see a rate that even resembles any of the bracket rates, for a variety of reasons. When looking at retirement as a whole, knowing your marginal tax rate isn’t very helpful. It's better to think about your effective tax rate and your effective marginal rate."
Read the Retirement Daily article in its entirety here.
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