7. Taxes

When you start to enter retirement, taxes will likely rise to the top of your list of expenses. 401(k) plans and traditional IRAs can be tax-deferred, which can help you boost your savings. However, once you start making withdrawals from these accounts, you’ll have to pay taxes on them.

Interest earned through retirement savings accounts is taxable at your ordinary income tax rate, and so may be the income that some bonds generate. You may also pay taxes on any profit you make from selling an investment.

Financial experts recommend maximizing your IRA and 401(k) options first before investing in taxable accounts such as bonds and mutual funds. This will help you avoid any hidden costs and fees.