This Expense in Retirement May Catch You Off Guard
You've spent decades grappling with your budget and learning the costs of your lifestyle. And guess what? You get to toss much of that knowledge aside and learn a new set of expenses once you retire. Budgeting in retirement is a whole new ballgame, and there's one expense that's likely to trip you up: taxes.
Taxes are tricky for retirees. If you've earned regular wages your whole life, you're used to automatic withholdings from your paycheck and an annual true-up of your tax bill. But once you leave the workforce, that hands-off approach to taxes could result in unnecessary penalties. Here's why: Most sources of retirement income are taxable, but those sources may not be withholding taxes on your behalf. That can be a shocker on two fronts. One, the IRS will assess an underpayment penalty, which is never ideal. And two, you'll have to rework your budget to set aside the money to pay Uncle Sam going forward.
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Source Fool.com
