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How Your Tax Rates Change In Retirement

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How Your Tax Rates Change In Retirement

Taxes have long been the bane of our existence. April comes around and everyone starts getting a little antsy. Life is suddenly measured in cash in, and cash out. Look around, what can you write off? The dog walker, can you get anything back as an expense? What about the newspaper? In retirement, various events conspire to lift you up the income ladders into the higher tax brackets at the top of the game board.

The taxes you paid during working years revolved around a career-oriented life. Mortgages, student loans, kids (not the dog) – many of your life choices could be used as a write-off against your income. Here are reasons you won’t fall into a lower tax bracket during retirement:

Debt Interest

Generally, we don’t want to be in debt, and the widespread advice regarding debt is you don’t want to owe any money by the time you retire. Reducing overhead is key since you don’t have an income anymore. But debt can work in your favor when it comes to taxes. Think of your mortgage payment. The total interest paid to the bank each year goes against your income on your tax return. The less interest you pay the bank, the less you can deduct from annual income. If there’s no interest, no deduction.

The same goes for student loans. By the time we retire, most loans are paid off, which means more income gets taxed, and, depending on your income, that can be the difference between one tax bracket and another.



It’s great to give back, and most of us do. During our working years, time is short. Between kids, work, chores, and time in between for a social life, it’s difficult to volunteer your time. Most working adults give to their favorite charities instead. But when you retire, it’s reversed. Now that you have a ton of free time, and no salary, donating your time is a much more feasible way to give back. The only problem is your taxes – we all write off our monetary donations, but time, unfortunately, is not worth anything to the IRS. Another reason your bracket might go up.

Retirement Contributions

There are two reasons this common tax write-off won’t be a part of your life anymore. The first, many accounts like IRAs cap the age at which you can donate – so if you’re a senior, you’re finished donating. The second, you’ve already retired! The money in your fund is coming out, now, not in, which means, no write-off.


Most retirees have an empty nest, with their kids grown and building their own lives. A quiet house is nice, but you may still miss your children. What you’ll certainly miss is their contribution to your tax return. With no dependents, that’s one less write-off.

Health Accounts

If you’ve been contributing to an HAS or a flex spending account, then you’ve been enjoying an annual income tax break. But as a retiree, now you’re on Medicare. Another write off gone.

It isn’t all bad news. While they probably won’t make up for your previous tax breaks, retirees do receive a standard deduction as well as a personal exemption. The best way to manage your new tax set up is to talk to a professional financial consultant. You may not be able to get as many write-offs, but at least you’ll have some help maneuvering the next tax cycle.

After Fifty Living™ was founded by Jo-Anne Lema, a genuine Boomer and member of the 50+ generation. As she likes to say, “Our enormous generation is charting new territory – we’re healthier, better educated, and more financially fit than any other generation at this time. And, as we march through history, 110 million strong – unique, new issues are developing. It’s exciting to be a part of the development and growth of This is a historic solution for a historic generation.”

Jo-Anne spent many years in the financial and operations side of higher education after having received a doctorate in education management and administration from Harvard, and an MBA from Southern New Hampshire University. Launching out on her own, though, has been the fulfillment of a life dream. Jo-Anne believes that “AfterFiftyLiving™ will delight its visitors, catalyze its partners, and will significantly benefit those who engage it.”

Residing in New England along with her husband of 35+ years, she never ceases to brag about her two children and 4 grandkids!

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