Social Security is America’s retirement system for most retirees. Advisers recommend that Social Security should comprise 40% of your retirement income. That’s just economic ideology that isn’t rooted in reality. For most of the middle class, Social Security benefits represent over half of their retirement income. That wouldn’t be so bad if Social Security benefits weren’t subject to ordinary income tax. To many American retirees, taxing Social Security is a broken promise. As recent as three years ago, many politicians promised not to alter Social Security benefits for the Baby Boomers. But in the stealth of night the Congress, shut down the “file and suspend” option for most Boomers and transferred the monies to support the near bankrupted Social Security disability fund. Many Boomers lost between $20,000 and $30,000 dollars due them. Social Security benefits generally paid a cost of living increase, but over the last seven years, the increase was either slight or none at all, i.e. not keeping pace with the real cost of living.
To protect Social Security benefits from being taxed, you have to defend two access points: one is Social Security income itself and other investments that are includable in the provisional income test for benefit taxation. The four tax-free funding vehicles that are not includable are: health savings accounts, Roth IRAs, Cash Value Non-Modified Endowment Contracts (TAMRA compliant life insurance) and Home Equity Conversion Mortgages. Under current law, these four could be designed to construct a tax-free retirement plan. And to counter Social Security benefit income, you need to use your tax deductions, exemptions and tax credits judiciously to offset the income.
Tax management is absolutely required in retirement to keep more money in your pocket, to spend as you see fit. But you need to include tax management at the beginning of the retirement savings process by selecting tax advantaged products and converting any qualified monies to Roth IRAs, if it makes sense in your situation.
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Released On: 12/27/2019
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Released On: 12/26/2019
For most wage earners and retirees taxes are the biggest expense they’ll ever have over their lifetime. Managing your tax bill effectively is learning to become a “gamer,” by avoiding tax traps and snares along life’s journey. You have to know th ...
Released On: 12/25/2019
It’s rather stunning to discover that most baby boomers have never had a budget in their life, but they’re going to need one in retirement. Retirement may be the biggest motivator for most Americans to create a budget because retirees live month ...
Released On: 12/24/2019
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Released On: 12/23/2019
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Released On: 12/20/2019
Living longer is exacerbating over a dozen other retirement risks that threaten the vast majority of retirees and those near retirement. If the status quo continues, the retirement lifestyle of most seniors will be severely pared back. Watch the ...
Released On: 12/19/2019
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Released On: 12/18/2019
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Released On: 12/17/2019
The last 100 years have seen a significant increase in human longevity compared to the earliest records of mankind. The spike in longevity has caught the Western world by surprise. The effects of this revolution are affecting financial planning a ...
Released On: 12/16/2019
There was a time when Social Security benefits were not exposed to ordinary income taxation. But over the years, small incremental steps were taken to tax the benefits. Maybe “means testing” may be implemented to shore up the vulnerable Social Se ...
Released On: 12/13/2019
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Released On: 12/12/2019
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Released On: 12/11/2019
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Released On: 12/10/2019
Retirement will undergo a drastic reinvention as the newest generation redefines it's golden years in their investment habits and senior lifestyle goals. https://www.youtube.com/watch?v=RAdtMWBaseY&feature=youtu.be
Released On: 12/9/2019
Your retirement account is only as big as your tax planning strategy. Your personal exemptions and standard deductions in retirement will not be enough to offset your tax bill. Tax management must be a major component of your retirement plan. Wat ...
Released On: 12/6/2019
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Released On: 12/5/2019
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Released On: 12/4/2019