Deciding how and when to withdraw funds from the patchwork of different retirement accounts represents the biggest financial planning challenge facing retirees, said Richard L. Kaplan, the Peer and Sarah Pedersen Professor of Law at Illinois.

“Too many new retirees think that once they have enrolled in Medicare, their health care cost worries are over,” he said. “But Medicare imposes a dizzying array of monthly premiums, annual deductibles and copayments for physician fees and prescription drug expenses beyond its almost complete lack of coverage of long-term care costs. The good news is that those costs will often generate a substantial income tax deduction, which can offset the tax on retirement plan withdrawals.”

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