Retirement savings will be affected by the American Taxpayer Relief Act of 2012 more than some Americans anticipated, according to an article by CBS News.
Previously, an investor could plan on being in a lower tax bracket after retirement. The new law has already introduced higher taxes for many people.
"One of the big mistakes is to assume you will be in a lower tax bracket," Rande Spiegelman, vice president of financial planning at Charles Schwab, told CBS. "Tax rates may be heading higher, so people should plan around the idea that they will be in the same bracket they are now."
Social Security income, pensions, taxable portfolio income and retirement account distributions, when all added up, can push retirees to a higher tax bracket than previously expected.
The new law also places those with an adjusted gross income over $400,000 in the 39.6 percent tax bracket. Capital gains and qualified dividends could be taxed at 20 percent instead of the previous 15. For single workers with an income of more than $250,000, deductions can no longer be itemized.
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