Taxes in Retirement: What You Need to Know

Withdrawals from traditional 401(k)s and IRAs are taxed as ordinary income. Up to 85% of Social Security benefits can be subject to federal income tax depending on your combined income. Investment gains in taxable brokerage accounts may trigger capital gains taxes. Required Minimum Distributions from pre-tax retirement accounts add to your taxable income whether you need the money or not, and can push you into a higher bracket, increase Medicare Part B and D premiums through IRMAA surcharges, and reduce the tax efficiency of other income. Fortunately, Georgia is one of the more retirement-friendly states, exempting Social Security benefits and offering a retirement income exclusion of up to $65,000 per person for those 65 and older. Proactive tax planning in retirement means thinking ahead about account withdrawal sequencing, Roth conversions, charitable giving strategies, and timing large income events to manage your bracket year by year.

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