If you're getting close to retirement, in addition to thinking about how to spend your well-earned leisure time, you also should be thinking about your taxes.
Many retirees are surprised by the impact that taxes would have on them, according to a recent survey by Lincoln Financial Group.
According to the "2013 Expense Challenges of Age 62-75 Retirees" survey, when asked what they expected their top expenses to be before they retired, the majority of pre-retirees surveyed said they expected home and mortgage, health care, and travel and leisure to be their most significant expenses during retirement.
But the answers from folks who already had retired were different. Instead of health care, their actual top expenses included taxes.
In fact, 36 percent reported that taxes were a larger expense than they had anticipated.
Types of taxes in retirement
The Lincoln Financial Group's survey focused on higher-income individuals. But taxes can show up in retirement in several ways and affect folks at all income levels.
Income still matters. While many state exempt pension and Social Security payments from state taxation, other types of income still are taxed. If you receive enough other income in addition to your Social Security, a portion of your federal benefits could be taxed.
Even though your traditional IRA was invested, distributions of earnings from this type of account are treated as ordinary income, not at the lower capital gains rates. If you claimed tax deductions for contributions to a traditional IRA, that also affects the taxability of that retirement account's distributions.
If you own a home, you will owe property taxes. Check with your county tax assessor about possible real estate tax relief for senior citizens. However, even with such a tax break, many older homeowners find they still face a property tax bill that's a challenge to meet on lower or fixed incomes.
Other retirement tax findings
The survey respondents offered a variety of answers when asked about tax moves they have made or would implement to lower their tax bills in retirement.
Thirty-six percent said they would consider moving to another state to reduce their personal income tax. It's no surprise that a popular retirement destination is Florida. The Sunshine State offers not only year-round warmer weather, but no state income tax.
Thirty-five percent said they intend to itemize deductions to reduce their tax bills. That's a good option for many people, working or retired. However, many older folks no longer have a major Schedule A claim, the mortgage interest deduction, because they've paid off their homes.
And, 23 percent admitted that as they planned for retirement, they didn't take tax planning into account.
Are you nearing retirement? Have you looked into what your post-work tax bill might be? If you're already retired, are you surprised by the taxes you owe?
More tax info from Bankrate
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Veteran contributing editor Kay Bell is the author of the book "The Truth About Paying Fewer Taxes" and co-author of the e-book "Future Millionaires' Guidebook."