How huge that could be? How about 60%?
We will use a simple example to illustrate.
A household of a retired couple who live in the state of California is looking for $250K as annual retirement income. How much pre-tax income does this family need to have in order for this $250K to be after-tax amount?
More than 50% higher!
Let's assume the effective income tax rate in California is 9.21%. The marginal Federal income tax rate after $223,050 is 33%.
In order to achieve the equivalent $250K after-tax retirement income, the pre-tax income has to be $397,041, a 59% increase!
Unbelievable, isn't it?!