November 2021 –

Tips to Neutralize Risk in Retirement

What if I end up in a nursing home later in life? Will I be able to afford my basic expenses, if my spouse passes away? Life Risk events are a daunting consideration that can give us sleepless nights. When one considers a Financial Plan, this is a BIG AREA to set aside time to address. To help on your journey, here are a few basic tips.

1) Concerned about the financial impact of passing or the passing of a loved one whose income one may be relying on?

TIP: Secure Life Insurance

2) Concerned about the risk of medical costs that may not be adequately covered by current insurance policies?

TIP: Secure health insurance or a Medicare Supplement policy

3) Concerned about the risk of long-term care costs if not able to care for oneself?

TIP: Secure Long-Term Care Insurance

Need help considering which policies might be the best to meet your individualized needs and budget? Contact us for help. AskUs@dedicatedfinancialservices.com | 1-866-US-Senior (866-877-3464)

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October 2021 – Strategies in Retirement You Should Try

While taxes are a fact of life, the amount you pay is NOT. How do you know if you’re paying more than you should? Take time out to review the latest tips in our Series: “Retirement Savings Strategies You Should Try.”

Tip #1: MAKE WITHDRAWALS STRATEGICALLY

In retirement, you often have income coming from many different savings accounts. Some of those accounts will be tax-deferred accounts, and it may be in your best interest to delay withdrawals from those accounts as long as possible limiting your taxable income each year. So, if you have a non-taxable withdrawal account such as a ROTH IRA and a taxable withdrawal account such as a 401K, you’ll want to defer making withdrawals from the 401k for as long as possible to keep you from moving into a higher tax bracket and having a higher tax bill.

Tip #2: MAX OUT YOUR TAX BRACKET

If at the end of the year you find you haven’t maxed out your current tax bracket consider withdrawing income from tax-deferred accounts to reduce your future taxable income. For example, if you have a large IRA and still have some wiggle room before you max out your current tax bracket, consider withdrawing funds from that IRA in the current year. Yes, you will be taxed on the money you withdraw, but only at your current tax rate. Each year you can reduce the amount of your IRA, the less money you have to pay in taxes in the future.

Tip #3: REDUCE EXPENSES

Sometimes paying less in taxes in retirement simply means reducing your current expenses. The less money you have to put out each month is less money you have to withdraw from your retirement accounts. Talk with your accountant to see what type of tax hit you might take if you paid off major expenses such as your car note, a mortgage – if you still have one – and other bills that aren’t part of monthly living expenses. You may find taking one big tax hit to eliminate those bills, means a much lower tax liability in the future as you will need far less money to live on month-to-month.

Tip #4: DEDUCTION BUNCHING

Try pulling some deductions into the current tax year to help minimize your overall tax liability. An example would be bunching two years’ worth of charitable giving into a single year to get over the itemized deduction threshold. Granted, this technique might put an undue strain on cash flow and savings but is an option for those that can afford it. With those extra charitable deductions, you can maximize your deductions for the current tax year.

Tip #5: MINIMIZE TAXES ON SOCIAL SECURITY BENEFITS

Your Social Security benefits are taxed based on your combined income. If you file jointly and your income is below $32,000, you won’t have to pay taxes on your Social Security benefits. If you’re single and your income is below $25,000, you won’t have to pay taxes on your Social Security benefits, either. As your taxable income increases, however, the more taxes you will have to pay on your Social Security benefits.

Tip #6: CONSIDER MOVING TO A ROTH IRA

While this isn’t a strategy that will work for everyone, if you have a large IRA consider moving some of it to a Roth IRA to help reduce future tax liability. The move can also help minimize your future minimum IRA distributions. To see if this strategy will work for you, mock up a tax return in the fourth quarter and see how much money you can remove before pushing yourself into a higher tax bracket.

Need help TAX PLANNING to make sure you don’t pay more than is needed? Retirement preparation is our specialty! Reach out for a free consultation: AskUs@DedicatedFinancialServices.com For help with Tax Planning to make the most of retirement, get in touch: 1-866-US Senior (1-866-877 3646) or AskUs@DedicatedFinancialServices.com