The Cash Flow Clock: For Retirees - Book - Page 69
The Cash Flow Clock
retirement, when we have the time and freedom to do
the things we have always dreamed of doing. If we
are pulling from tax deferred assets to fund our
retirement, our taxable income may actually be
higher once we stop working.
Even if our income is lower in retirement, our taxable
income could be higher. If our house is paid off,
property taxes are low, dependents are out of the
house, etc., then the tax deductions and credits we
enjoyed early in our career will no longer be there
when we retire. Tax rates are going up starting in
2026 (based on current law) and are likely to increase
beyond that unless the government figures out a
different way to resolve the issues surrounding Social
Security, Medicare, the national debt, etc.
Perhaps the biggest factor in determining our taxes in
retirement is the death of a spouse. While that can
occur at any time, it is certainly more likely the older
we get. Surviving spouses almost always have less
income (because at least some Social Security
income will go away, not to mention pensions or
wages) and will be in a higher tax bracket (because
they are now filing as a single taxpayer instead of
married filing jointly).
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