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Taxes in Retirement: An Unknown Risk for Most People

By Steve Gaito

McDowell Countysteve gaito Mcdowell county retirement resource management


“There are two systems of taxation in our country: one for the informed and one for the uninformed” Judge Learned Hand U.S Court of Appeals, 2nd Circuit. Truer words have not been spoken about retirement savings.

For most of our working careers, people are encouraged to save money in what is known as a qualified retirement plan. Most recognize these as a 401(k) or 403(b) plan but they also include IRA’s and 401(a) plans that are where companies contribute money on your behalf. They all have the same challenge. The money in them has not been taxed. This obligation is a huge risk in retirement and one that can mean hundreds of thousands of dollars in additional taxes should you not understand how to withdraw in a tax-efficient way.

The reality is that there is a minimum tax that you will pay for the deferral of taxes. This is mandatory, but what most fail to understand is that the rest is a voluntary tax that you are choosing to pay. This voluntary tax is what you pay when you leave your qualified money in the accounts and do not take advantage of the historically low marginal tax brackets. If you want to see the difference between your mandatory tax and voluntary tax, I have a simple calculator on my website that with answers to a couple of simple questions will give you this information.

With the Trump Tax laws sunsetting in 2026, there is a window to take advantage of lower brackets for most people. So, what happens in 2026? The tax brackets revert to the older, higher tax brackets. This is known as legislative risk. The risk that all qualified retirement plans face. The risk is that the government will raise tax taxes in the future. With over 30 trillion in debt and with our current inflation this is undoubtedly a risk that all will face.

So how do you address this risk? It is simple. You must choose to pay more taxes now to pay significantly less later. Instead of thinking of paying more taxes now think of it as paying your taxes now while they are on sale instead of waiting for them to go back up to the full price. The change for most is around a 30% difference with the change of brackets and rates. If you want to pay 30% or more in taxes just wait and you will pay significantly more in the future.

With proper planning we can help you address income that will not be impacted by the market, create tax-free income for the future, minimize the risk of a long-term care event and reduce the impact taxes will have on your retirement. For most these strategies help them create a retirement plan that is easy to understand and one that gives them peace in retirement.

I have many free resources on my website such as books, videos, and calculators. They are all free and there for one reason. To help you make informed decisions about your retirement. I also offer a free initial consultation to make sure that the services I provide match what you need for your future. I love helping people pay fewer taxes and get more out of their retirement.


Steve is the owner of Faith-Based Health Care and Retirement Resource Management. He is a National Speaker on the topic of Social Security optimization, quoted in national publications like Money Magazine, US News and World Reports, and Fox Business. Steve loves to educate and teach on financial topics like taxation of retirement accounts, long term care, healthcare, and efficient savings plans for small businesses. He has provided financial planning for missionaries through the International Mission Board. You can find Steve at 68 South Main St. in Marion, NC by calling 828-559-0299, email or visit his website at

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