Don't let state taxes derail your retirement: What you need to know

Retirement savings have grown dramatically, but many investors may be underestimating the tax bill that can arrive in retirement. With most assets still held in pre-tax accounts like 401(k)s and traditional IRAs, distributions can create meaningful federal income taxes later on.

State taxes add another layer of complexity, since treatment of Social Security, pensions, and retirement account withdrawals varies widely by location. Some states offer no income tax or exclude certain retirement income, while others still tax these payments.

For advisors and investors, this makes tax planning as important as portfolio construction. Where someone retires can influence after-tax income just as much as how much they saved.