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Making Your Retirement Less Taxing

It’s easy to think that you’ll be paying less tax in retirement. After all, you’re not working full time anymore and, odds are, your income is less. But hang on – let’s look at the whole picture:

Your deductions may disappear: Once the house is paid off and the children are grown, you may not get the same tax breaks for deductions and dependent exemptions. And beginning in 2017 for all age groups, medical expenses have to exceed 10% of adjusted gross income rather than 7.5% to be deductible.

Your Social Security might be taxed: The IRS has a pesky concept called provisional income where you add up half of your SS benefits, plus all of your other income (including tax-exempt interest). If it is greater than $32,000 for married couples and $25,000 for singles, some of your SS will be taxed. This dollar amount is not indexed for inflation in the tax code, and catches more and more retirees each year.

You might be in a higher tax bracket at age 70 ½: Many retirees have a golden period between retirement and age 70 ½ when they are in a lower tax bracket. But once the minimum distributions kick in from your tax-deferred 401k’s and IRA’s, you can easily get pushed to a higher bracket, where you will stay for your lifetime.

Your finances get more complicated: You don’t have an employer to withhold taxes anymore, so now you need to pay quarterly estimates or manage the withholdings of your SS and taxable investment distributions. Plus, you may have multiple investment accounts that need consolidation to withdraw money tax-efficiently.

The good news is that there are solutions for all of these tax challenges. And that’s what we specialize in – preparing retirees for the next phase of life in the most tax-efficient manner possible. You CAN control how much tax you and your heirs will pay in the future. Every tax year that goes by without a plan is another lost opportunity, and it’s up to you to get started. Call 622-2162 for a complimentary meeting or reserve your spot at our next Lunch ‘n Learn to learn more.


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