A new survey from Nationwide Retirement Institute shows a high percentage of retirees lack an understanding about the effect of taxes on their retirement income, which is something many may come to regret.
According to the survey, about 60% of future retirees, 70% of recent retirees and 75% of those retired for over a decade said they were only somewhat knowledgeable or not at all knowledgeable about tax planning.
More than one third, or 37% of retirees, admitted they hadn’t considered how taxes would impact their retirement income when they were planning for the event.
The survey showed that more than half of those who are not yet retired would like to be more informed on how they will be taxed in the future. Many of these respondents also did not know about the effects of tax bracketing, according to the survey.
The numbers show an appetite to learn more.
The overwhelming majority of those nearing retirement (82%) want to learn about taxes, Nationwide Retirement stated.
“Today, the majority of older consumers are focusing on saving for retirement, which is a critical component of your retirement plan, but not the only factor,” stated Eric Henderson, president of Nationwide’s life insurance business in a statement. “Building tax flexibility into a retirement income plan is crucial.”
The situation leads many to have wished they had been more proactive about planning earlier.
The survey found that more than a quarter of older consumers owe tax money each year while those retired for more than 10 years are least likely to receive a tax refund each year.
Almost half of recent retirees responded that they wish they would have better prepared for paying taxes in retirement, with nearly a quarter acknowledging in retirement that they have paid several thousands of dollars more in taxes than they expected to.
The survey was conducted online by The Harris Poll on behalf of The Nationwide Retirement Institute in late August 2018 and included 1,031 adults age 50 or older.