Tax rates
Tax rates represent the percentage of your income paid in taxes during different stages of life. Understanding how tax rates affect your income before and after retirement is important for accurate financial planning. Taxes reduce the amount of income available for spending and affect how long your investments may last.
Tax rate before retirement
Your tax rate before retirement is the average percentage of your income that you expect to pay in taxes each year until you retire. This rate applies to:
Earned income (such as wages and salaries)
Unearned income (such as taxable investment gains that you realize before retirement)
A higher tax rate reduces your net income, leaving less available for spending and investing. It also slows the compounding of taxable investments because more gains are paid out in taxes each year.
Tax rate after retirement
Your tax rate after retirement is the average percentage of your income that you expect to pay in taxes each year after retiring. This rate applies to:
Retirement income (including Social Security and pensions)
Taxable investment withdrawals or gains
Any earned income during retirement
A higher post-retirement tax rate means you’ll need to withdraw more from your investments to meet your expenses, which may affect how long your retirement savings last.
Tip: Use realistic estimates based on your current tax bracket, anticipated changes in income, and future tax policy. If unsure, consult a tax advisor.
Note for our Canadian Customers
The following terms will be different in the Canadian releases of Quicken.
Canada: "Cheque" / United States: "Check"
Canada: "Colour" / United States: "Color"
Canada: "Centre" / United States: "Center"
Canada: "Realise" / United States: "Realize"
Canada: "Behaviour" / United States: "Behavior"
Canada: "Analyse" / United States: "Analyze"