Paying Income Tax in Retirement: A Growing Concern - Motley Fool; Nationwide

In its recent Tax-Efficient Retirement Income (TERI) Study, the folks at Nationwide took an in-depth look at the relatively complex issue of taxation and how the IRS rules can affect retirement income planning. According to The Motley Fool’s Christy Bieber, ” … most future retirees are concerned about the impact their tax obligations will have on the amount of money these benefits will provide — and they’re right to worry, as it’s likely more retirees will be subject to taxes over time.”

As Ms. Bieber points out in her post today on, the source of this taxpayer concern relates in large part to IRS provisions calling for inclusion of Social Security benefits as taxable income for those with countable income above certain thresholds–thresholds that haven’t been indexed for inflation and that haven’t been adjusted in decades. What once impacted only about 10% of the taxpaying public unfortunately hits about half of all taxpayers, and without indexing or adjustment, that swath of impact will continue to grow.

Ms. Bieber’s post provides thoughts on how to mitigate this taxation problem, at least in part, via strategies like investing in Roth IRAs. While this would help lower the tax obligation retirees at withdrawal time, it’s still likely that the number of households affected by this particular IRS provision will remain well above the originally projected impact. After all, the income tax rules are a major factor in Social Security’s revenue stream–$36.5 billion in 2019–so it’s unlikely it will go away.

Read Ms. Bieber’s post here, and for a slide show recapping the Nationwide TERI study results, click here…


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