Most Americans will have a lower tax burden in retirement than during their working years.

However, that may not be the case for some retirees, especially for higher earners and big savers, which could have a significant impact on their financial plans, according to financial advisors.

“Substantial evidence” suggests retirees have lower tax rates than during their working years, according to a 2024 paper published by the Center for Retirement Research at Boston College.

There are a few general reasons for this, according to a joint 2017 research paper by the Internal Revenue Service and Investment Company Institute: People who leave the workforce no longer pay payroll taxes. Their household income often drops, generally meaning less income is taxed. And Social Security recipients only pay tax on a portion of their benefits.

The “overwhelming majority” of people will have a lower tax rate in retirement, “hands down,” said Jeffrey Levine, a certified financial planner and certified public accountant based in St. Louis and chief planning officer at Buckingham Wealth Partners.

But that’s not always the case.

Those who’ve built up a sizable nest egg, perhaps with disciplined saving in a 401(k) plan or individual retirement accounts, may have large required minimum distributions, Levine said.

For example, the IRS requires that older investors take minimum withdrawals annually from “traditional” (i.e., pre-tax) retirement accounts when they reach a certain age. (It’s age 73 for those who turned 72 after Dec. 31, 2022.)

The total amount is based on an IRS formula. A bigger nest egg generally corresponds to a larger RMD.

This matters because RMDs from pre-tax accounts add to a household’s taxable income, thereby raising its total tax bill. By contrast, distributions from Roth accounts aren’t taxable, with some exceptions.

Investors held $11.4 trillion in traditional IRAs in 2023, about eight times more than the $1.4 trillion in Roth IRAs, according to the Investment Company Institute.

Additionally, investors who inherited a retirement account, perhaps from a parent, may have to empty the account within 10 years of the owner’s death, Levine said. Such withdrawals from a pre-tax account would further add to taxable income.  

In such cases, their taxable income may exceed that of their working years, said Jenkin, a member of the CNBC Financial Advisor Council.

“Most clients we sit down with today don’t want to see a diminished amount of income when they retire,” Jenkin said. “They still want to take the same level of trips, level of going out to concerts and dining, taking care of grandchildren, and many are still carrying a mortgage into retirement.”

In the first three to five years of retirement, Jenkin actually finds clients generally spend more than they do during their working years due to what he calls “a period of jubilation.”

“A lot of people just don’t want to shrink their lifestyle,” he said.

Congress may change the tax code, for example. To that point, there’s tax fight looming next year that could impact things like the size of the standard deduction and marginal income-tax rates.

That said, even if Congress were to increase the marginal income-tax brackets in the future, most retirees would likely still see their “personal tax rates” fall versus their working years, Levine said.

President-elect Donald Trump‘s victory means higher individual taxes, including levies on investments, are less likely for top earners, experts say.

Vice President Kamala Harris proposed higher long-term capital gains tax rates during her campaign — raising the top rate to 28% from 20% — for those making more than $1 million annually. Long-term capital gains rates apply to assets owned for more than one year.

Harris’ plan veered from President Joe Biden‘s 2025 fiscal year budget, which called for 39.6% long-term capital gains taxes on the same top earners. 

Higher capital gains tax rates, however, are “entirely off the table,” under a Trump presidency and Republican-controlled Congress, said Erica York, senior economist and research manager with the Tax Foundation’s Center for Federal Tax Policy. 

Republicans secured control of the Senate on Tuesday and could maintain a narrow majority in the House of Representatives, which creates a “trifecta” in the White House and both chambers of Congress.

Even with partial Republican control, “it’s most likely that capital gains tax policy just stays put where it is,” York explained.

For 2024, investors pay long-term capital gains rates of 0%, 15% or 20%, depending on taxable income. Assets owned for one year or less are subject to regular income taxes.

You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income. The taxable income thresholds will increase in 2025.

“Republicans may try to get rid of the net investment income tax,” said Howard Gleckman, a senior fellow at the Urban-Brookings Tax Policy Center.

But “that’s a big item” that could add significantly to the federal budget deficit, he said.

The deficit topped $1.8 trillion in fiscal 2024.  

Some consumers have been weighed down by a “vibecession” for a while now — and those feelings might get worse, experts say.

A “vibecession” is the disconnect between consumer sentiment and economic data, said Kyla Scanlon, who coined the term in 2022. Scanlon is the author of “In This Economy? How Money and Markets Really Work.”

“It’s this idea that economic data is telling us one story and consumer sentiment is telling us another,” she tells CNBC.

Nearly half, 45%, of voters say they are financially worse off now than they were four years ago, and the highest rate since 2008, according to NBC Exit Poll data.

Yet economic metrics show the economy is booming. Inflation, while it’s still a burden for consumers, has slowed down significantly. While some warning signs have popped up in the job market, to some degree conditions are normalizing from the red-hot market of a few years ago.

“The economy is so extraordinarily personal, and people really hate inflation,” said Scanlon. “That’s what we saw in this presidential election.”

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Even if the economy stays on track, Americans will likely continue to feel a “vibecession,” experts say.

The vibes might actually get worse, depending on what policies President-elect Donald Trump enacts, said Jacob Channel, senior economist at LendingTree. High-rate tariffs on imported goods will likely wipe out progress made to reduce inflation.

“If Donald Trump as president enacts the economic policies that he proposed as a candidate, we’re not only going to have a vibecession, we’re going to have a real recession,” Channel said.

Inflation, or the rate at which prices for goods and service increase over time, has come down — which means prices are still rising, but at a slower pace. Prices overall remain high, said Brett House, economics professor at Columbia Business School.

“Americans’ lingering frustration with the economy and their personal circumstances appears rooted in the persistently high prices that remain post-pandemic,” he said. “This makes for daily sticker shocks when buying groceries, getting a burger, paying rent and filling up the car.”

The consumer price index, a gauge measuring the costs of goods and services in the U.S., grew to a seasonally adjusted 0.2% in September, putting the annual inflation rate at 2.4%, according to the Bureau of Labor Statistics.

While the Federal Reserve is still concerned about inflation, “we’re seeing these signs of weakness in the labor market,” Scanlon said.

The quits rate was 3.1 million in September, a 1.9% decrease from a month before, the Bureau of Labor Statistics reported. There’s also a slowdown in hiring. The economy only added 12,000 jobs in October, the BLS reported. That’s less than the forecast of 100,000 increase and lower than the 223,000 jobs added in September.

To be sure, “a lot of this is just simply normalization after the distortions that occurred after the COVID shutdowns,” said Mark Hamrick, senior economic analyst.

Additionally, the unemployment rate continues to hold steady at 4.1% and wage growth is up 4% from a year prior. “This suggests that the labor market remains firm despite signs of weakening,” J.P. Morgan noted.

The stock market rallied after the presidential election results. Just before close on Wednesday, the Dow Jones Industrial Average had surged more than 1,500 points to a record high. The S&P 500 also popped more than 2%, while the tech-heavy Nasdaq Composite jumped 2.9% — both to record highs.

U.S. bond yields also rose. The 10-year Treasury yield jumped 15 basis points on Wednesday closing to trade at 4.43%, hitting its highest level since July, as investors bet a Trump presidency would increase economic growth, along with fiscal spending.

The yield on the 2-year Treasury was up by 0.073 basis points to 4.276%, reaching its highest level since July 31.

That could be a warning sign, Scanlon said: “I don’t think the inflation story is over yet. That’s what the bond market is telling us.”

Depending on what policies are enacted under Trump’s second term, the inflation problem might get worse, experts say.

“When we see treasury yields rising [and] the possibility of another $7 [trillion] to $10 trillion added to federal debt, those are not anti-inflationary moves, nor are mass deportations,” Hamrick said.

Trump has proposed a 10% to 20% tariff on all imports across the board, as well as a rate between 60% and 100% for goods from China. Such moves “will be inflationary,” Scanlon said. On top of that, his fiscal plan could potentially add $7.75 trillion in spending through fiscal year 2035, according to the Committee for a Responsible Federal Budget.

“Who knows what will actually get passed from this fiscal plan, but massive tax cuts and tariffs … it’s expensive, and the bond market’s telling us that,” she said.

According to the National Bureau of Economic Research, a recession is “a significant decline in economic activity that is spread across the economy and lasts more than a few months.” The last time this occurred was in the onset of the pandemic in 2020.

However, it doesn’t necessarily take for these conditions to take place for consumers to feel negative about the economy. It can be “very difficult to square” what people are feeling in their everyday lives versus national averages and medians, experts say.

“There’s still going to be that continued disconnect between how people feel and what the economy is doing,” Scanlon said.

To that point, “the vibecession will endure,” Channel said.

And if consumers end up having to deal with extra costs associated with tariffs every time they go to the grocery store, “the vibes might actually start to get a whole heck of a lot worse,” Channel added.