In the course of planning for your senior years, you’ll surely know to account for certain unavoidable expenses — housing, transportation, meals, and the like. While some of your retirement expenses may be fairly predictable, here are a few that could end up being much costlier than expected. Consider yourself warned.
Your tax rate as a senior will depend on your total income. If you have a healthy amount of it between your Social Security benefits, retirement plan withdrawals, and other sources, your tax bill may be a lot higher than expected.
Read up on the various types of retirement income that get taxed so you’re not caught off guard. For example, Roth IRA and 401(k) withdrawals are yours to enjoy tax-free, whereas traditional retirement plan distributions are taxable. Furthermore, if Social Security isn’t your sole or primary source of income, there’s a good chance you’ll pay taxes on those benefits as well.