One of the most common mistakes I see people make is overestimating their tax rate in retirement.

This is important for a couple of reasons. First, as Roth 401(k) and 403(b) plans become more common, estimating your future tax rate is a big factor in deciding whether you should make Roth or pre-tax contributions. Second, your tax rate is used to estimate your after-tax retirement income in determining how much you need to save. Let's take a look at some of the reasons why your tax rate in retirement may be lower than you think:

Your Income Will Probably Be Lower

Experts typically recommend that you need about 80% of your pre-retirement income in retirement, but depending on your situation, you may need even less. How much of your income goes to saving for retirement and paying into Social Security? Do you have a mortgage and other debts that will be paid off? Do you have kids that will no longer be financially dependent on you? How much do you spend on commuting and other work-related expenses?

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