People Ignore a Ticking 'Tax Bomb' That Can Decimate Retirement. Here's How to Stay Safe, According to a Former JPMorgan Executive.

""Many people assume their taxes will go down [in retirement] because their income will go down," Anne Lester explains. Unfortunately, exiting the workforce doesn't always mean lower taxes. Instead, many retirees have to contend with a 'retirement tax bomb.'""

""When people reach the age of taking minimum required distributions from retirement savings accounts, they actually could move into a higher tax bracket than expected. This can also increase social security taxes and Medicare surcharges.""

""What looks good on paper, which is to maximize all your tax-advantaged growth, may not make sense if it's going to bump you into a higher tax bracket, so you might want to consider drawing some money out of that IRA or 401(k) plan systematically beforehand.""

Retirees often face a 'retirement tax bomb' due to unexpected tax burdens from savings in 401(k)s and IRAs. Minimum distribution requirements can push retirees into higher tax brackets, increasing social security taxes and Medicare surcharges. Many assume taxes will decrease in retirement, but this is not always the case. Strategic withdrawals from retirement accounts before reaching the minimum distribution age can help mitigate tax impacts. Individuals should start planning for these distributions by age 60 to avoid financial surprises.

Read at Entrepreneur