How Much Taxes Will Retirees Owe on Their Retirement Income?

Title How Much Taxes Will Retirees Owe on Their Retirement Income?
Publication TypeReport
Year of Publication2020
AuthorsChen, A, Munnell, AH
Series TitleCenter for Retirement Research at Boston College Working Papers
Document NumberWP#2020-16
InstitutionCenter for Retirement Research at Boston College
CityBoston
KeywordsRetirement, Taxes
Abstract

To evaluate their retirement resources, households approaching retirement will examine their Social Security statements, defined benefit pensions, defined contribution balances, and other financial assets. However, many households may forget that not all of these resources belong to them; they will need to pay some portion to federal and state government in taxes. It is unclear, however, just how large the tax burden is for the typical retired household and for households with different income levels. This project aims to shed light on the tax burdens that retirees face by estimating lifetime taxes for a group of recently retired households. The project uses data from the Health and Retirement Study (HRS) linked to administrative earnings to determine Social Security benefits and administrative records on state of residence to estimate state tax liabilities. Income is then projected over the expected retirement of each household. Federal and state taxes, are estimated with TAXSIM, for each household on its reported and projected income.

URLhttps://crr.bc.edu/working-papers/how-much-taxes-will-retirees-owe-on-their-retirement-income/
Citation Key11262