We all know that old pearl of wisdom from Ben Franklin that goes “in this world nothing can be said to be certain, except death and taxes” – but it’s amazing how many retirees forget that fact. Taxes are just as big of a pitfall and problem for those in their golden years as those in their working years.
And yet, many retirees are clueless about the very basics of taxation when it comes to their nest eggs. That’s a serious problem, and one that could potentially come with plenty of headaches at tax time, including a possible audit or two.
Plenty of Pitfalls When It Comes to Taxes
There’s a general attitude among those who are retiring that the event is basically tax free. Psychologically that attitude most likely comes from the fact that when you are working your employer deducts a percentage of what you earn off each paycheck for the Feds. That sort of automatic deduction isn’t there when you retire. (Costs are also very important in investing. Find out why here.)