When you retire, the last thing you want to be worrying about is money. But not having regular paychecks can put stress on even the most careful accountants. And with taxes taking some of your hard-earned savings, it is important to do what you can to protect your future. Understanding how you will be taxed can help you save for retirement or help make your money last through your golden years.

Tax BracketTaxes and Retirement

The first step to knowing how you will be taxed is learning what tax bracket you will be in, if you are in a low enough bracket you may only be taxed 10% on your income. To do that you need to add up the sources of taxable income (wages, tips, Social Security, and pensions), subtract any deductions, and apply any credits. Then put that information into a tax program or to your accountant to find out your tax bracket. For the 2020 tax season, brackets range from 32% on income over $207,350 to 10% on incomes $9,875 or lower (if you are filing jointly the income amounts double).

Once you know that it’s time to strategize how to make your retirement savings last as long as possible. One strategy is to live in a tax-friendly state where there is no income tax; some states that do this are Texas (the home of Sun City), Florida, South Dakota and Washington. Federal law states that you can’t be taxed on income made in another state so even if you move your savings will be secure.

Related: 7 Common Mistakes to Refinancing


Another strategy is to reassess your investments, talk to a financial advisor about getting the most out of your stocks. Municipal bond interest isn’t charged tax but it could affect the tax on your Social Security benefits.

The Waiting Game

While it’s not possible for everyone, another option is to wait as long as possible before dipping into your Social Security. The longer you wait the more credits you earn which means more benefits that are potentially tax-free.

But taxes don’t always have to be a negative on your accounts. If you are still saving for retirement, you can put your tax refund to work by padding a savings account or for creating an emergency fund. You can also use it to pay off any large debts so you have less to worry about later on.

Your golden years may not be dripping in gold but you can still make yourself a comfortable nest egg. By being smart about your daily living expenses and tax payments you can ensure that you will have everything you need to live out your retirement dreams.

More: How to Buy Your First House Over 55

Best Retirement Communities in Georgetown Texas

7 Mistakes to Avoid when Buying a House Sight Unseen

6 Easy Steps to Move Into Your Senior (and best) Life