Sharon is looking good for her retirement. She is not going to run out of money. And just based on her current set up she will be able to leave money to her heirs too. (Obviously, this is just a MODEL not a prediction. I have no clue this will come to fruition.)
So, Sharon shouldn’t do anything differently, right?
Wait until you see how the tax man works. You’ll see that while Sharon is in the 12% tax bracket she will pay 22% taxes on her Required Minimum Distributions(RMDs)!
How can this be? Simple. When you are in a certain tax bracket, your distributions from your deferred accounts will be taxed but those distributions will also increase your taxes on Social Security too!
Remember the tax code is supposedly “progressive”. Well not for retirees with lower income who are receiving Social Security.
It’s a scam, my friends. And disgraceful.
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