Taxes during retirement (+ or -)

[smileydog]

In an effort to accurately predict taxes in retirement I was looking to find an online resource (possibly calculator) that might let you estimate total tax burden with some basic assumptions. Also, my question to those of you that have FIREd – how has your tax burden changed? Is there perhaps a good rule-of-thumb that one could use that would give a SWAG at this? I know there was a recent thread about total tax burden - but I don't recall responses specifying if that was before or after FIRE.

 

[Martha]

The Dinkytown website has a number of simple calculators, including one that will estimate your federal taxes based upon some simple information you feed the calculator. 1040 Tax Calculator - Financial Calculators from Dinkytown.net

Of course, you have to make a guess as to what your income is going to be, and whether it is capital gain income or ordinary income. From what people have posted here in the past, many have substantially reduced tax burdens when they retire.

Another useful tool is at i-orp. It helps you optimize withdrawls from retirement assets to minimize taxes. Retirement Calculator

 

[smileydog]

Thanks Martha! The dinkytown site is a good reference. I also have a copy of Turbo Tax and I am running various scenarios based on different options. One of the things I am trying to get my arm around is how settling in different states affects the total tax bill. I am also considering the advantages in converting some traditional IRA funds to Roth in 2010. I know that this all depends on the tax burden now vs. perhaps a lower tax burden post retirement.

One good thing... I'm getting pretty darn good at excel spreadsheets.

 

[aenlighten]

Expenses are more important

What will you need to live? That will determine your tax bracket. If you are debt free and own your home it should be lower. If you have a lot of deductions that will go away and expenses that rise faster than inflation, it will probably be higher. If you are in a low bracket now, it will probably be higher. If you are in a high bracket now, it will probably be lower. Mine is much, much lower as now I largely live off after tax savings but will increase some once I tap deferred accounts. The Tax Foundation compiles all sorts of tax information across states.