Most of us have heard the argument; “I will be in a lower tax bracket when I retire”. This statement never ceases to amaze me and, more importantly, disturb me for several reasons. First, why do so many aspire to have a significant “pay cut” reduction in their income once they reach retirement.
Retirement is commonly referred to as the “Golden Years”, right? This implies that you worked hard and long enough to have saved enough gold to live like Kings and Queens.
Second, when are you more likely to spend more money: while you are working or when you are on vacation? Since the obvious answer is while on vacation, isn’t it fair to say that retirement is supposed to be a wonderful, long, and enjoyable vacation from work? Therefore, retirement is arguably the time when you have earned the right to spend and enjoy your hard-earned wealth and income.
The Rest of the Story:
Yes, more income does mean more taxes, indisputably. However, here is my theory on taxes; “Make a lot of money, pay a lot of taxes, and repeat the process.”
So again, let’s again analyze the pros and cons. The main pro for deferring Social Security income is simple. More income means more taxes, and nobody likes paying more taxes.
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