MARY M from CA posted over 5 years ago:

I find this article extremely misleading. The last paragraph should be the lead off -- most people are going to pay much more, especially if they are doing Roth conversions under the current tax brackets. Most retirement planning software projections do not emphasize that deferred-tax accounts will pay taxes on withdrawals. I also don't see any mention of state tax brackets, which add to the reduction of RMD withdrawals. To describe this properly, the income quintiles should be defined, and the tax burden should be highlighted. AAII can do better.

LARRY B from WV posted over 5 years ago:

I agree with Mary. What is the value of the "All" column? An average of averages tells me nothing. Similarly, "Quintiles" means nothing without the income ranges represented by the divisions. Of course state taxes vary from state to state, but they are not insignificant for most--I find my state tax bill to be about 1/2 that of my Federal taxes, and I live in a fairly low-tax state (WV).

STEPHEN P from GA posted over 5 years ago:

This is an article with no real data points... making it pointless. I expect better of AAII. It's beginning to feel like you get the good stuff only if you subscribe to a premium service.

SCOTT O from FL posted over 5 years ago:

This is only a summary of the original research paper attributed to the author. A thorough read of that paper, for which there is a link at the end of the article, is fairly full of data points and a comprehensive overview of tax liability for retirees. Bottom line is if you got it, you're going to be taxed on it, not much differently than when you were making it. The two most interesting take-aways in my mind are 1) marriage is so much more common with those in the higher and highest brackets and 2) it can be shown that only 50% of Social Security income should be taxed for any income level, pointing to the fact that IRA savings and defined contribution plans have become so much more prevalent. The only data points that may be missing are monetary retirement income figures to match the quintile and highest brackets but these can be deduced from figures in Tables of the research paper itself.

CHARLES R from IL posted over 5 years ago:

For those who are interested, the Center for Retirement Research at Boston College study this dispatch was based on is linked to above. The CRB, at the time of this post, is providing open access to the study. -Charles

JAMES M from MT posted over 5 years ago:

Because single unmarried individuals spend less than married couples, the data is somewhat misleading. Maybe we should divide the single tax rates by 2 or some other appropriate amount? Thanks, JimM

LINDA P from MO posted over 5 years ago:

"Tax liabilities are rarely greater than 2% of retirement income for retirees in the bottom four quartiles" this is saying that 80% of retirees pay 2% tax???????????????????.... Hogwash! This is the worst written article presented by AAII.

ROGER K from MA posted over 5 years ago:

What are you guys smoking...Your so called tax ranges have no merit. You should be ashamed of yourselves.

RUSSELL C from OR posted over 5 years ago:

I agree with those above who dislike the way AAII has portrayed this article. The synopsis, if you could even call it that, is just click bait. I suggest that you all read the full article using the provided link. The authors have done a great job! Kudos to them and no kudos to AAII editors of the email newsletter. The concluding gist of the authors is this: "The results, show the tax burden on retirement income is negligible for the vast majority of households. Taxes as a percentage of retirement income in the first four quintiles range from 0 percent to 1.9 percent. Serious tax liabilities arise only in the top quintile.' The subject line of the email should have been phrased: "Good news! Study finds that taxes on retirement income is only significant for the top quintile of the income spectrum." I hope the newsletter content supervisors have learned a lesson here.

NORMAN B from SC posted over 5 years ago:

The policy implications of the findings are: • Taxes are meaningful for the top quintile, who are mostly married couples with average combined Social Security benefits of $50,900, 401(k)/IRA balances of $325,400 and financial wealth of $441,400. • If these retirement and financial assets were fully annuitized, the amount a household would receive is equivalent to about $3,000 a month, and these households face tax liabilities of about 11 percent. • Thus, for many households reliant on 401(k)/IRA or financial assets for security in retirement, taxes are an important consideration.

NORMAN B from SC posted over 5 years ago:

Another point made by the authors is how the tax brackets for SS taxation have not been indexed to inflation and are thus making retirement even more challenging for people of modest means in retirement. Congress needs to get rid of these political footballs and index everything to inflation and be done with it!

JAMES M from MT posted over 5 years ago:

I read the original article upon which the AAII brief was written. All told the original is quite informative. AAII notwithstanding. JimM