In Retirement, More Spending Leads to Higher Taxes - Motley Fool Hidden Gems Investing

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[00:03]
A
When you retired. Spending this year could affect your tax bill for years to come. I explain why in this Saturday personal finance edition of the Motley Fool Hidden Gems Investing Podcast. I'm Robert Brocamp, and before we dig into this week's topic, I'd like to highlight a new Foolish resource you know One of my earliest educational experiences about investing came during a Literature of the American south class in college, believe it or not. And the lesson didn't come from the professor, but from one of my fellow students, Dads, who was a financial advisor, and asked the professor if he could talk for 15 minutes about the importance of starting investing early. He showed how much we could accumulate 20, 30, 40 years down the road if we just started investing even a little bit at our young ages. That lesson stuck with me and was one of the reasons why I opened an IRA in my early 20s. If you'd like to provide that kind of lesson to the young people in your life, then I invite you to be among the first to experience the Fool Community Foundation's new tool, the Ferdometer, before it launches in classrooms this fall. Through interactive simulations and real world scenarios, the Ferdometer helps students discover how investing can turn small decisions today into long term wealth. Sign up in just 10 seconds@FoolFoundation.org Fredometer.
[01:31]
B
You just found out that your sales team is at risk of missing quota. Don't panic. Just ask Rippling AI. Since it's built on your real time people and business data, Rippling AI can pull metrics from Rippling and Salesforce into a meeting ready dashboard showing quota attainment, headcount plan and monthly revenue to quota by region. In seconds, you'll see exactly what's behind your quota risk and fix it before it's missed. Question answered and action taken. Crisis averted. When you have critical business questions that need answers, don't just file a ticket and wait weeks for an outdated report. Describe what you need and have Rippling AI build it instantly from your live people and business data. Whether it's a dashboard with detailed charts or automated workflows with the right triggers, conditions and approvals ready to rule your business, head to Rippling AI fool to get the only AI built to give you full visibility and take complex actions across your entire organization. That's R I P P L I N G A I F O O L Sign up for exclusive access today. Rippling AI fool of course, the number
[02:38]
A
one reason people accumulate wealth is to retire. Which brings us to the main topic of today's show. Many factors will determine your ability to retire. But there's one that is at the heart of your money destiny. It's also the one over which you have the most control, and that is your spending while working. The more you spend, the less you have leftover to save once you've retired. The more you spend, the higher your withdrawal rate and the higher the chances that you'll deplete your portfolio. Now, that's all common sense, but there's one aspect about spending in retirement that is generally less appreciated. The higher your expenses, the more you have to withdraw from your investment accounts. This often results in higher taxes, which in itself is another expense that necessitates even more withdrawals, which then results in even more taxes and so on. To illustrate this, let's consider a hypothetical couple with the following particulars. So each spouse is 66 years old. They receive $40,000 a year from Social Security. They claim the standard deduction for 2026, which is $32,200 for married folks, plus an additional $1,650 apiece for couples 65 and older. They each also claimed the $6,000 bonus senior deduction available to citizens 65 and older created by the one big beautiful bill. However, as a married couple, it does begin to phase out at an adjusted gross income above $150,000, and that figure is $75,000 for single filers. And the rest of their income that they're going to need is going to be withdrawn from traditional retirement accounts, which will be taxed as ordinary income. So using the 1040 calculator@dinkytown.net, which is an excellent resource for all kinds of financial calculators, here are this couple's estimated 2026 federal taxes and based on different levels of annual income. So first off, if they keep their spending below $73,500 or so, their federal tax bill is zero. That's thanks to a higher standard deduction and bonus. That bonus senior deduction for the 65 and older crowd the partially tax free nature of Social Security and historically low tax rates in general. However, once their spending goes above that level, additional withdrawals could result in higher taxes. So just to give you an idea, at spending of $80,000 a year, their taxes would be more than $1,200. If their spending were $100,000, that would drive up their tax bill to more than $5,000. If their annual spending were $150,000, their taxes would be more than $11,000. And if they're well off retirees and they're spending $200,000 a year, their tax bill jumps to almost $23,000. Unfortunately, it doesn't end there. When April of 2027 rolls around and our hypothetical couple has to pay that higher tax bill for 2026, how will they get the money? By withdrawing more from their retirement accounts which will increase their taxable income for 2027. Then when April of 2028 rolls around, they'll have to withdraw more to pay that higher tax bill which will increase their taxable income for 2028 and so on. In other words, an expense today could affect their tax bills for years to come. Now admittedly, this illustration is somewhat of a worst case scenario, right? The couple's tax bill would not increase if the additional spending were covered by qualified withdrawals from Roth accounts, which are tax free. This is one of the many reasons to bulk up your Roth assets before retirement. Or the couple might cover their extra spending by selling assets held for longer than a year in a regular brokerage account. Right? Cost basis comes out tax free and the gains are taxed at lower long term capital gains rates, which actually can be as low as 0% for taxpayers below certain income thresholds, at least up to a limit. So additional spending by a hypothetical capital may not result in quite as much additional taxes. On the other hand, this analysis completely ignores state and local income taxes. The key here is that how you'll cover an expense in retirement will determine the tax consequences. Now when it comes to spending and taxes in retirement, there are two other considerations. First up, Social Security. Now the good news is that not all of your Social Security benefits will be taxed. Exactly how much is added to your taxable income will depend on your so called combined income, also known as your provisional income, which is calculated by adding 50% of your Social Security benefit to your other income sources, which includes interest from otherwise tax free municipal bonds but not qualified withdrawals from Rolf accounts. The level of your combined income determines the percentage of your benefits that will be included in your taxable income according to the Social Security tax tax brackets. Now it should be said that these brackets don't adjust for inflation, so they're pretty low. And I suspect that most people listening to this podcast will be in the top bracket. But it is one other way that higher spending in retirement could lead to a higher tax bill. And now we come to that other government retirement benefit, Medicare. Every year the monthly premiums charged for parts B and D are adjusted higher income retirees pay an extra fee known as the income related monthly adjustment amount or irmaa. These extra surcharges are based on your modified adjusted gross income from two years prior, so the amounts that retirees are paying in 2026 are based on their 2024 tax returns this year. These IRMAA charges kick in for singles who had a 2024 modified adjusted gross income above $109,000, and it's twice that amount, or $218,000 for married joint filers. Less than 10% of retirees actually pay the IRMA surcharges, since most retirees actually get by on pretty modest incomes. However, it often comes as a surprise to retirees who generally don't pay the surcharge but make a large withdrawal in a single year. Maybe to make a large purchase like an rv, second home or a family vacation, as happened to someone I know who sold stocks to take his entire family on a Cruise for his 80th birthday. Again, this is another way that higher spending in retirement could have other financial consequences.
[08:38]
B
As a podcaster, my voice is heard by thousands of people. And now with Vanguard Investor Choice, I can be heard by the companies I invest in too. Vanguard Investor Choice makes it easy for eligible Vanguard Fund investors to have a say in how their funds vote at company shareholder meetings. With just a few clicks, you can set your proxy voting preference and make your voice heard on topics like executive pay, board director elections, and more. Investor participation is the heart of a healthy corporate governance ecosystem. You have a voice. Let it be heard. Visit vanguard.com investorchoice to learn more. Vanguard investors own shares of Vanguard index funds, and those funds own shares of the companies they invest in, available for Vanguard index funds that participate in investor Choice. Vanguard Marketing Corporation Distributor they say leadership isn't just about where you're going, it's about the conviction it takes to get there. For those who demand the world and possess the drive to claim it, there's a vehicle of equal distinction. Dynamic by design and engineered for pure impact, the Range Rover Sport rises to meet you the moment you take the lead. This is the most advanced Range Rover Sport yet, a masterclass in uncompromised performance and unbridled agility. Inside, the innovation is seamless. You'll find an elegant 13.1-inch touchscreen that puts total control of the vehicle's systems right at your fingertips. But it's the refinement that sets it apart. Sculpted 22 way heated seating with built in massage function ensures every journey is is defined by peerless comfort. Whether it's through unique interior finishes or custom wheel options. The ways to personalize your Range Rover Sport are nearly unlimited. Command attention and experience ultimate luxury in motion. Exclusive offers are available now. Explore further@range rover.com so what should you
[10:29]
A
do with all this information? Well, first off, I do want to make it clear that I don't think you should spend your retirement pinching pennies just so you can stick it to the irs. You saved and invested for decades in order to have a fulfilling retirement and you should enjoy it. However, I do think it's important to understand the full cost of additional spending in retirement, right? Whenever we buy something, we always look at the price tag. And it's important to know that any purchase in retirement that requires a bigger withdrawal from an IRA or a taxable brokerage account, that true cost of that purchase is going to actually be higher than what you see on that price tag. Furthermore, you can limit your post work tax bill by contributing more to Roth accounts or converting traditional accounts to Roth accounts. And here's one final consideration. Make it a goal to pay off your debts before you retire. Nowadays, Americans are more comfortable going into retirement with debt. Back in 1989, less than half of households in the 65 to 74 age range had any debt, according to the Federal Reserve. Today, two thirds of people in that age range owe someone money. That debt represents an ongoing retirement expense, which you guessed it could result in higher taxes. Nowadays, quickly paying down debt provides a pretty solid guaranteed return, which is essentially the interest rate you're paying. The rates on most types of loans, such as mortgages, auto loans, school loans are around 7% now, sometimes a bit lower, oftentimes a good bit higher. The average rate on a credit card is around 20%. On top of that, several studies have shown that retirees with less debt are happier. One example, the 2024 MassMutual Retirement Happiness Study, which found that 61% of retirees who are much happier in retirement compared to when they were working said they worked to pay off their debt at least five years before retirement, compared to 48% of those who are not happier in retirement. So paying those debts off before you retire, especially using cash or bonds that are only earning 4% or less, will lower your expenses in retirement, which in turn could lower your taxes and make you feel more financially free. And that, my foolish friends, is the show. Thanks so much for spending part of your weekend with us, and thanks to Bart Shannon, the engineer for this episode. As always, the people on the program may have interest in the investments they talk about, and the Motley fool may have formal recommendations for, for or against. So don't buy or sell investments based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our Show Notes. I'm Robert Brokamp. Full on, everybody.

Summary4 min read

Motley Fool Hidden Gems Investing
Episode: In Retirement, More Spending Leads to Higher Taxes
Date: August 8, 2026
Host: Robert Brokamp

Episode Overview

In this Saturday personal finance episode, host Robert Brokamp explores how spending decisions in retirement can have long-lasting tax implications. Using practical examples and expert analysis, Brokamp explains the “tax domino effect” that can follow higher retirement withdrawals and offers actionable strategies to manage both taxes and spending in your post-work years.

Key Discussion Points and Insights

1. The Underappreciated Impact of Spending in Retirement

Controlling Spending as a Key Factor:
- “The more you spend, the less you have left over to save once you’ve retired. The more you spend, the higher your withdrawal rate and the higher the chances that you’ll deplete your portfolio.” (02:41)
Tax Feedback Loop:
- Higher expenses often mean higher withdrawals from tax-deferred accounts, which increases taxable income—setting up a repeating cycle of higher withdrawals and higher taxes.

2. A Detailed Hypothetical: Impact of Spending on Taxes

Assumptions for a Retired Couple (Both Age 66 in 2026):
- $40,000/year Social Security income
- Claiming the standard deduction ($32,200), the $1,650 senior deduction each, and a $6,000 bonus senior deduction per spouse (unique to 2026 law)
- Remainder of income comes from traditional retirement account withdrawals (taxed as ordinary income)

Tax Example Table:

| Annual Spending | Estimated Taxes (2026) | |-----------------|---------------------------| | $73,500 | $0 | | $80,000 | >$1,200 | | $100,000 | >$5,000 | | $150,000 | >$11,000 | | $200,000 | ~$23,000 |

The Cycle Explained:

“When April of 2027 rolls around and our hypothetical couple has to pay that higher tax bill for 2026, how will they get the money? By withdrawing more from their retirement accounts which increases their taxable income for 2027...” (04:44)
This pattern can snowball into future years with compounding tax implications.

3. Strategies to Mitigate Tax Impact

Roth Accounts as a Shield:
- Roth IRA withdrawals are tax-free, so boosting Roth assets before retirement can break the withdrawal-tax cycle.
Brokerage Accounts:
- Selling long-held assets from after-tax brokerage accounts can qualify for lower long-term capital gains rates, sometimes even 0% depending on your income.

Quote: “The key here is that how you'll cover an expense in retirement will determine the tax consequences.” (06:24)

4. Social Security Taxation

Not all Social Security benefits are taxable.
“Exactly how much is added to your taxable income will depend on your so-called combined income...calculated by adding 50% of your Social Security benefit to other income sources.” (06:43)
Social Security tax brackets don’t adjust for inflation, so more retirees may fall into higher brackets over time with increased spending.

5. Medicare and IRMAA Surcharges

Medicare Parts B and D premiums have surcharges (“IRMAA”) tied to income from two years prior.
2026 IRMAA thresholds:
- $109,000 AGI for singles
- $218,000 AGI for married couples
Even one-time large withdrawals (e.g., for a big trip or purchase) can trigger surcharges unexpectedly.
“Less than 10% of retirees actually pay the IRMAA surcharges...however, it often comes as a surprise to retirees who generally don't pay the surcharge but make a large withdrawal in a single year.” (07:39)

Actionable Advice for Retirees

1. Don’t Live in Fear of Taxes

“I don’t think you should spend your retirement pinching pennies just so you can stick it to the IRS. You saved and invested for decades in order to have a fulfilling retirement and you should enjoy it.” (10:33)

2. Factor in True Costs

“...any purchase in retirement requiring a bigger withdrawal from an IRA or a taxable brokerage account, the true cost...is going to actually be higher than what you see on that price tag.” (10:46)

3. Emphasize Roth Accounts and Debt Payoff

Grow Roth balances or convert traditional accounts to Roth before retirement.
Pay off debts before retiring, as debts are ongoing expenses that can necessitate further withdrawals and thus higher taxes.

Quote: “Paying those debts off before you retire...will lower your expenses in retirement, which in turn could lower your taxes and make you feel more financially free.” (12:39)

4. The Debt and Happiness Connection

The 2024 MassMutual Retirement Happiness Study found that 61% of retirees happiest in retirement paid off their debt at least five years before leaving work.

Notable Quotes & Memorable Moments

On spending and long-term tax effects:

“An expense today could affect their tax bills for years to come.” — Robert Brokamp (04:23)
On Roth IRAs as a tax-saving strategy:

“One of the many reasons to bulk up your Roth assets before retirement.” (05:24)
On IRMAA surprises:

“It often comes as a surprise to retirees...who make a large withdrawal in a single year.” (07:45)

Timestamps for Important Segments

[02:37] — Introduction to spending and taxes in retirement; hypothetical example begins.
[04:23] — Explaining the withdrawal/tax feedback cycle.
[05:24] — Using Roth IRAs and brokerage accounts for tax efficiency.
[06:24] — Discussion of combined income and Social Security taxation.
[07:25] — Explanation of Medicare, IRMAA surcharges, and real-world examples.
[10:29] — Summary advice and action steps; emphasis on not living too frugally.
[12:39] — Debt payoff and links to retirement happiness.

Summary

Robert Brokamp’s episode offers a clear, compelling look at the interplay between spending and taxation in retirement. He cautions that higher expenses can lead to a “tax domino effect,” reducing nest eggs faster than retirees might expect. Through examples and research-backed advice, Brokamp encourages listeners to plan for taxes, leverage Roth accounts, pay off debts, and above all, enjoy the retirement they’ve worked hard to secure—while staying aware of the true costs of their spending decisions.

Loading summary

Transcript5 lines

[00:03]
A
When you retired. Spending this year could affect your tax bill for years to come. I explain why in this Saturday personal finance edition of the Motley Fool Hidden Gems Investing Podcast. I'm Robert Brocamp, and before we dig into this week's topic, I'd like to highlight a new Foolish resource you know One of my earliest educational experiences about investing came during a Literature of the American south class in college, believe it or not. And the lesson didn't come from the professor, but from one of my fellow students, Dads, who was a financial advisor, and asked the professor if he could talk for 15 minutes about the importance of starting investing early. He showed how much we could accumulate 20, 30, 40 years down the road if we just started investing even a little bit at our young ages. That lesson stuck with me and was one of the reasons why I opened an IRA in my early 20s. If you'd like to provide that kind of lesson to the young people in your life, then I invite you to be among the first to experience the Fool Community Foundation's new tool, the Ferdometer, before it launches in classrooms this fall. Through interactive simulations and real world scenarios, the Ferdometer helps students discover how investing can turn small decisions today into long term wealth. Sign up in just 10 seconds@FoolFoundation.org Fredometer.
[01:31]
B
You just found out that your sales team is at risk of missing quota. Don't panic. Just ask Rippling AI. Since it's built on your real time people and business data, Rippling AI can pull metrics from Rippling and Salesforce into a meeting ready dashboard showing quota attainment, headcount plan and monthly revenue to quota by region. In seconds, you'll see exactly what's behind your quota risk and fix it before it's missed. Question answered and action taken. Crisis averted. When you have critical business questions that need answers, don't just file a ticket and wait weeks for an outdated report. Describe what you need and have Rippling AI build it instantly from your live people and business data. Whether it's a dashboard with detailed charts or automated workflows with the right triggers, conditions and approvals ready to rule your business, head to Rippling AI fool to get the only AI built to give you full visibility and take complex actions across your entire organization. That's R I P P L I N G A I F O O L Sign up for exclusive access today. Rippling AI fool of course, the number
[02:38]
A
one reason people accumulate wealth is to retire. Which brings us to the main topic of today's show. Many factors will determine your ability to retire. But there's one that is at the heart of your money destiny. It's also the one over which you have the most control, and that is your spending while working. The more you spend, the less you have leftover to save once you've retired. The more you spend, the higher your withdrawal rate and the higher the chances that you'll deplete your portfolio. Now, that's all common sense, but there's one aspect about spending in retirement that is generally less appreciated. The higher your expenses, the more you have to withdraw from your investment accounts. This often results in higher taxes, which in itself is another expense that necessitates even more withdrawals, which then results in even more taxes and so on. To illustrate this, let's consider a hypothetical couple with the following particulars. So each spouse is 66 years old. They receive $40,000 a year from Social Security. They claim the standard deduction for 2026, which is $32,200 for married folks, plus an additional $1,650 apiece for couples 65 and older. They each also claimed the $6,000 bonus senior deduction available to citizens 65 and older created by the one big beautiful bill. However, as a married couple, it does begin to phase out at an adjusted gross income above $150,000, and that figure is $75,000 for single filers. And the rest of their income that they're going to need is going to be withdrawn from traditional retirement accounts, which will be taxed as ordinary income. So using the 1040 calculator@dinkytown.net, which is an excellent resource for all kinds of financial calculators, here are this couple's estimated 2026 federal taxes and based on different levels of annual income. So first off, if they keep their spending below $73,500 or so, their federal tax bill is zero. That's thanks to a higher standard deduction and bonus. That bonus senior deduction for the 65 and older crowd the partially tax free nature of Social Security and historically low tax rates in general. However, once their spending goes above that level, additional withdrawals could result in higher taxes. So just to give you an idea, at spending of $80,000 a year, their taxes would be more than $1,200. If their spending were $100,000, that would drive up their tax bill to more than $5,000. If their annual spending were $150,000, their taxes would be more than $11,000. And if they're well off retirees and they're spending $200,000 a year, their tax bill jumps to almost $23,000. Unfortunately, it doesn't end there. When April of 2027 rolls around and our hypothetical couple has to pay that higher tax bill for 2026, how will they get the money? By withdrawing more from their retirement accounts which will increase their taxable income for 2027. Then when April of 2028 rolls around, they'll have to withdraw more to pay that higher tax bill which will increase their taxable income for 2028 and so on. In other words, an expense today could affect their tax bills for years to come. Now admittedly, this illustration is somewhat of a worst case scenario, right? The couple's tax bill would not increase if the additional spending were covered by qualified withdrawals from Roth accounts, which are tax free. This is one of the many reasons to bulk up your Roth assets before retirement. Or the couple might cover their extra spending by selling assets held for longer than a year in a regular brokerage account. Right? Cost basis comes out tax free and the gains are taxed at lower long term capital gains rates, which actually can be as low as 0% for taxpayers below certain income thresholds, at least up to a limit. So additional spending by a hypothetical capital may not result in quite as much additional taxes. On the other hand, this analysis completely ignores state and local income taxes. The key here is that how you'll cover an expense in retirement will determine the tax consequences. Now when it comes to spending and taxes in retirement, there are two other considerations. First up, Social Security. Now the good news is that not all of your Social Security benefits will be taxed. Exactly how much is added to your taxable income will depend on your so called combined income, also known as your provisional income, which is calculated by adding 50% of your Social Security benefit to your other income sources, which includes interest from otherwise tax free municipal bonds but not qualified withdrawals from Rolf accounts. The level of your combined income determines the percentage of your benefits that will be included in your taxable income according to the Social Security tax tax brackets. Now it should be said that these brackets don't adjust for inflation, so they're pretty low. And I suspect that most people listening to this podcast will be in the top bracket. But it is one other way that higher spending in retirement could lead to a higher tax bill. And now we come to that other government retirement benefit, Medicare. Every year the monthly premiums charged for parts B and D are adjusted higher income retirees pay an extra fee known as the income related monthly adjustment amount or irmaa. These extra surcharges are based on your modified adjusted gross income from two years prior, so the amounts that retirees are paying in 2026 are based on their 2024 tax returns this year. These IRMAA charges kick in for singles who had a 2024 modified adjusted gross income above $109,000, and it's twice that amount, or $218,000 for married joint filers. Less than 10% of retirees actually pay the IRMA surcharges, since most retirees actually get by on pretty modest incomes. However, it often comes as a surprise to retirees who generally don't pay the surcharge but make a large withdrawal in a single year. Maybe to make a large purchase like an rv, second home or a family vacation, as happened to someone I know who sold stocks to take his entire family on a Cruise for his 80th birthday. Again, this is another way that higher spending in retirement could have other financial consequences.
[08:38]
B
As a podcaster, my voice is heard by thousands of people. And now with Vanguard Investor Choice, I can be heard by the companies I invest in too. Vanguard Investor Choice makes it easy for eligible Vanguard Fund investors to have a say in how their funds vote at company shareholder meetings. With just a few clicks, you can set your proxy voting preference and make your voice heard on topics like executive pay, board director elections, and more. Investor participation is the heart of a healthy corporate governance ecosystem. You have a voice. Let it be heard. Visit vanguard.com investorchoice to learn more. Vanguard investors own shares of Vanguard index funds, and those funds own shares of the companies they invest in, available for Vanguard index funds that participate in investor Choice. Vanguard Marketing Corporation Distributor they say leadership isn't just about where you're going, it's about the conviction it takes to get there. For those who demand the world and possess the drive to claim it, there's a vehicle of equal distinction. Dynamic by design and engineered for pure impact, the Range Rover Sport rises to meet you the moment you take the lead. This is the most advanced Range Rover Sport yet, a masterclass in uncompromised performance and unbridled agility. Inside, the innovation is seamless. You'll find an elegant 13.1-inch touchscreen that puts total control of the vehicle's systems right at your fingertips. But it's the refinement that sets it apart. Sculpted 22 way heated seating with built in massage function ensures every journey is is defined by peerless comfort. Whether it's through unique interior finishes or custom wheel options. The ways to personalize your Range Rover Sport are nearly unlimited. Command attention and experience ultimate luxury in motion. Exclusive offers are available now. Explore further@range rover.com so what should you
[10:29]
A
do with all this information? Well, first off, I do want to make it clear that I don't think you should spend your retirement pinching pennies just so you can stick it to the irs. You saved and invested for decades in order to have a fulfilling retirement and you should enjoy it. However, I do think it's important to understand the full cost of additional spending in retirement, right? Whenever we buy something, we always look at the price tag. And it's important to know that any purchase in retirement that requires a bigger withdrawal from an IRA or a taxable brokerage account, that true cost of that purchase is going to actually be higher than what you see on that price tag. Furthermore, you can limit your post work tax bill by contributing more to Roth accounts or converting traditional accounts to Roth accounts. And here's one final consideration. Make it a goal to pay off your debts before you retire. Nowadays, Americans are more comfortable going into retirement with debt. Back in 1989, less than half of households in the 65 to 74 age range had any debt, according to the Federal Reserve. Today, two thirds of people in that age range owe someone money. That debt represents an ongoing retirement expense, which you guessed it could result in higher taxes. Nowadays, quickly paying down debt provides a pretty solid guaranteed return, which is essentially the interest rate you're paying. The rates on most types of loans, such as mortgages, auto loans, school loans are around 7% now, sometimes a bit lower, oftentimes a good bit higher. The average rate on a credit card is around 20%. On top of that, several studies have shown that retirees with less debt are happier. One example, the 2024 MassMutual Retirement Happiness Study, which found that 61% of retirees who are much happier in retirement compared to when they were working said they worked to pay off their debt at least five years before retirement, compared to 48% of those who are not happier in retirement. So paying those debts off before you retire, especially using cash or bonds that are only earning 4% or less, will lower your expenses in retirement, which in turn could lower your taxes and make you feel more financially free. And that, my foolish friends, is the show. Thanks so much for spending part of your weekend with us, and thanks to Bart Shannon, the engineer for this episode. As always, the people on the program may have interest in the investments they talk about, and the Motley fool may have formal recommendations for, for or against. So don't buy or sell investments based solely on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check out our Show Notes. I'm Robert Brokamp. Full on, everybody.