When you’re planning your retirement, paying taxes shouldn’t be too far in the back of your mind, or else you run the risk of paying more than you intended. Perhaps, you can write off your contributions now, so you’ll be able to invest more now, and have that next egg later, right? Unfortunately, depending on the types of investments that you have, that’s not always the case. This is why it’s important to understand your investments and what they’ll mean for you down the road before you commit to them.

Non-Taxable Income in Retirement

Believe it or not, there are a few investment vehicles that will keep your money in your bank account and out of the government’s coffers.

The most well-known is a Roth IRA (Independent Retirement Account). These accounts allow you to contribute up to $5,500 a year, or $6,500 if you’re over the age of 50. This extra $1,000 a year is  called a “catch-up” contribution, since 50-year-olds are closer to retirement age. With a Roth, these contributions are made with money that’s already been taxed. So, when you withdraw the money in retirement, it’s tax-free.

Another popular, and easy-to-use form of tax-free investments is simply municipal bonds. Essentially, you are buying a bond for a set amount — let’s say $100 — and will cash it in later for a larger value. Since these are federal bonds, you won’t have to pay federal taxes when you cash them in, however, you may still need to pay state income taxes. Still, these are one of the most popular low-to-no tax options for retirees.

Taxable Income in Retirement

As you’d imagine, there are far more taxable investments than tax-free. These include your 401(k), 403(b), and most IRAs except for Roth IRAs. However, the tax rules on these vary depending on your situation. They’ll take into account your age (because a 72-year-old in retirement may be entitled to different benefits than a retired 65-year-old). Even your pension can be taxed, if you don’t have a special circumstance, like being in the military. Additionally, you may be subject to up to an 85% tax on your social security benefits.

Sound a little intimidating? That’s ok. This is why there are people who can walk you through the process so that you have enough saved up to enjoy your golden years while letting your investments grow.

Tax laws are nuanced and prone to change, so if you have any questions about your investments, or what you should be investing in, talk to a financial professional. If you already have a portfolio you’re comfortable with, consult a tax professional before paying Uncle Sam.