Retirement planning mistakes you probably don't realize you're making

Between your Social Security benefits and your nest egg, you might find yourself on the receiving end of a pretty healthy income stream in retirement, especially if you've saved well. But don't assume all of that money will be yours to keep. Chances are, the IRS will also be entitled to its share, especially if your retirement income is substantial.

There are several ways you might get taxed in retirement. First, unless you have a Roth IRA or 401(k), your nest egg withdrawals will be taxed as ordinary income — meaning your highest possible rate. The same holds true for many types of pensions. Furthermore, if your income exceeds a certain threshold, you could get taxed on up to 85% of your Social Security benefits. Finally, just as interest and investment income are taxable during your working years, so too are they subject to taxes during retirement.

The takeaway? Be sure to factor taxes into the mix when calculating your anticipated retirement income. If you're planning to withdraw $30,000 a year from your 401(k) and you expect your ordinary income tax rate to be 25%, know that you'll end up with only $22,500, and plan your expenses accordingly.