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When Can a Tax Torpedo Happen?
Retirees might get hit with a tax torpedo once they cross certain income thresholds.
However, once individual filers exceed $34,000, their benefits are taxed up to 85%.
How To Avoid the Tax Torpedo
Here are a few ways to avoid the tax torpedo.
Unlike traditional retirement accounts, investors add money to Roth accounts with after-tax income.
So, when people withdraw from Roth accounts in retirement, their money is tax-free.
Track Your Withdrawals
People in retirement need to plantheir withdrawals carefully.
Tracking retirement income regularly can help people stay on top of potential tax payments and prepare for tax season.
Why This Matters
Many people worry they wont have enough money saved for retirement.
Thats why its important to be aware of tax laws and how they will impact Social Security.
After all, themore money peoplespend on taxes, the less disposable income they have in their golden years.
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