In Your Golden Years The Government Wants More of Your Gold

If the Bush tax cuts are not extended, January 1 will bring a lot of unpleasant surprises for everyone, and seniors could be hardest hit:

The baby boomers' nest egg will soon start to crack if the Bush tax cuts are allowed to expire.

Retired seniors could be among the hardest hit by the failure to extend Bush-era tax cuts on Jan. 1 since they rely most on investments and savings

Lawmakers have been warning for months about the income-tax consequences for working families, including penalties on marriage and a reduction in child tax credits.

But those living off investment income would see not only their 401(k) and savings accounts taxed at higher income rates, but also dividends and capital gains skimmed deeper and deeper by the federal government.

Studies of IRS data put out by The Tax Foundation show seniors over 65 earn more from dividends and capital gains than any other age group -- more than $77 billion in dividends and more than $150 billion in capital gains in 2008.

That means for retired workers, every penny is that much more valuable. Investment income typically supplements Social Security, or vice versa, and tax analysts say that if the Bush tax cuts expire, it could mean thousands of dollars less every golden year.

At the link you'll find a Tax Hike Calculator to show you how much the tax hikes could affect your income.