At Prosperitus Wealth, we know that the transition from job to retirement is a bit complex. For decades, you received either regular paychecks or earning from your business, and now it is going to stop very soon. During your retirement, you will be taking out all the money that you deposited gradually for all those years.
When it comes to retirement, plenty of behavioral and financial changes raise tax planning questions and opportunities. In the following section of the article, we will address some common concerns for impending retires and strategies to address these concerns. Let us have a look at these here.
Some of the top concerns are:
How much of the social security income will be taxable?
How does one plan for annual taxable income and how to take advantage of “income timing” to accelerate or defer tax on income?
How to go for tax planning in case you become a widow or widower?
How to use deduction “bunching” to optimize tax savings by annually alternating itemized deductions with the standard deduction?
The amount of taxes on the social security income will depend upon half the amount of the social security income, and your income from the other sources. This amount is called provisional income. There are different ways to tax the social security income and you can talk to your financial advisor in Broward County to know in detail about it.
Social security program is designed as a safety net program that must supplement personal savings and possibly income from a pension. It was not intended to be most individuals’ only source of retirement income and one must make plans for other sources of income during one’s retirement. It is up to you to either save during your adulthood and have other sources of income or just have social security income for your retirement. It is a wise decision to get in touch with a financial advisor in Broward County to know the prospects.
Taxpayers encounter two types of income during retirement: fixed (annuities and social security pensions), and variable (investment accounts, traditional and ROTH IRAs, 401 (k)accounts).
The good thing about fixed income is that it is a consistent source of income, the downside is that it limits the available tax planning options. The variable income allows for more income timing and tax planning opportunities such as Roth conversions, tax-gain or tax-loss harvesting, Qualified charitable distributions.
Your financial advisor in Broward County is the best person to get in touch with know the right ways to save tax during your retirement. If you need help, you can reach out to us anytime.