Taxation of Retirement Income

Taxation of retirement income refers to the taxes you pay on the money you receive during retirement, such as pensions, Social Security benefits, and withdrawals from retirement accounts like 401(k)s or IRAs. Generally, traditional retirement accounts are taxed as ordinary income when you withdraw funds. However, some retirement income, like Roth IRA withdrawals, may be tax-free if certain conditions are met. The tax rate depends on your total income in retirement; higher income may lead to higher taxes. It's important to plan for these taxes to manage your retirement savings effectively.