Taxes and retirement
How taxes eat into your retirement savings
Taxes touch your savings three times. Seeing where they show up helps you keep more of what you worked for.
1. When you earn it
Income tax comes out of your paycheck before you can save. Pre-tax plans like a 401(k) delay that tax until later.
2. While it grows
In a regular investment account, interest, dividends, and gains are taxed each year. Those tax dollars also stop growing — this is called tax drag.
3. When you spend it
Withdrawals from 401(k)s and traditional IRAs are taxed as income. Required withdrawals, Social Security, and Medicare costs can push taxes higher.
Try your own numbers
About 0.18% of your growth goes to taxes each year.
If nothing were lost to taxes
$541,427
After yearly taxes
$526,485
- Taxes paid along the way
- $9,479
- Growth those taxes could have earned
- $5,463
- True cost of taxes
- $14,942
Saved. Your retirement projection now uses this yearly tax rate on money in regular taxable accounts.
Educational estimate only, not tax advice. Federal taxes only; no state taxes or credits. Growth is not guaranteed. Please review decisions with a qualified tax professional.