Taxes and Retirement

Taxes Keep Increasing – Why? How can I retire on my meager income?

Most taxes are based on a percentage of item cost. As the cost of the item/service rises, so does the tax. If you own real estate, you’ll know your tax rate is based upon the assessed value of the land/house. If taxes are a percentage of value, then they self adjust with inflation (as assessed value rises) and therefore logically the percentage rate has no need to rise.

Why do taxes keep going up?

  • We here in America (Canada and US) have exported most of our manufacturing jobs to Asia. (Governments don’t have very good input from income tax if no one is working in their country. Service sector jobs are low income and don’t provide what manufacturing jobs did in terms of remuneration or taxes to our governments. (I’d love it if they brought back manufacturing to North America.)

 

  • Secondly, the baby boomers are retiring and will overwhelm our governments with pension payments and medical bills. Population is not growing at a substantial rate, the percentage of retirees is increasing dramatically. (You might ask – Why don’t the governments increase the benefits of having children possibly through government financial incentives to mothers.)

 

Our governments unfortunately are nearly bankrupt and will be looking at us to fill their coffers through greater taxes. Keep the cost of your accommodation/consumer purchases minimal and you’ll maximize your income from your pension. You’ll be in a lower income tax bracket. It is odd to think that the more income/the more you spend in retirement, the more you are taxed, but ultimately this is a truth we must endure.

Plan for your retirement with this in mind.

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