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What If Your Tax Bill is Bigger After You Retire?

Do you think taxes are going to be the same, lower, or higher as you head into your retirement years? We polled thousands of people in a similar situation as you across the country, and the overwhelming response was “taxes will go higher than it is now.” Of course, no one can say for sure what will happen in the future, so most of them are just guessing. However, they have a valid point.

Tax Bill
Tax Bill

We know for a fact that the Trump tax bill and all the relief it may have offered will expire in 2025. And the current speculation around the federal government suggests taxes may go even higher than what it was before the 2017 reform. So, it is very likely that taxes will go up around the time you start earning retirement income. 

What does this mean for you? 

If, as at the time you structured your retirement savings, you made it so you deferred taxes during contribution – it means your post-work income will be taxed. This isn’t an issue, you factored it in from the start. What you didn’t factor in, however, is higher taxes. Now, it has become a real possibility that you end up paying higher levies on the amount you saved + interest you earned on your savings. In simple terms, you’ve basically been procrastinating a larger tax bill. 

This could translate to a lower income than you initially planned for, and it can be concerning for individual employees and business owners. We also understand that this may be the last thing you want to hear at this moment, especially with everything that’s been going on with the US and indeed, the global economy. But it is what it is, and it’s time to focus on actions that can salvage the situation.

What can be done?

At this point, the most expedient course of action is to take steps that minimize the impact of potential tax increases. For a start, you could look toward adjusting your budget, work on generating new streams of income, and making sure more money is coming in to offset whatever extra you pay in taxes. On the other hand, you could consider talking to a tax specialist and working out a strategy that puts you on the front foot. 

This means taking advantage of any available tax breaks, deductions, and reliefs. And it’s smarter to do this now so you’re not left doing all that work when the issue is harder to salvage. To help you along, we’ll continue to monitor the tax situation and provide updates as things evolve. When more information is available, we’ll be sure to keep you in the loop.

For now, you can contact us to discuss whatever concerns you have or questions you need answers to. All you have to do is follow this link and schedule a one-on-one consultation. The entire meeting will be done online, so you don’t need to leave the comfort of your home or office, and it’s completely free. Talk to you soon.

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