Life Insurance Blog

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For most retirees living on fixed incomes, every penny account. Unfortunately for them, every dollar counts to the Internal Revenue Service, too. Retirees whose income – including half of social security benefits and income from capital, such as tax exemption of interest from municipal bonds – exceeds the IRS is up to 85 percent their social security benefits are taxable. With the threshold set in 2002 to $ 44,000 for joint applicants and $ 34,000 for applicants, retirees may face a tax of thousands of dollars on their social security benefits.”Pensioners are very concerned about this issue,” said Bill Kring, a certified financial planner with Kring Financial Management in Atlanta. There are some fairly easy ways seniors can take to reduce taxes on social security, especially taking steps to obtain their income under the threshold, he noted.Often, retirees have money in certificates of deposit earn interest. They do not need income immediately, and they just roll over the CDs at maturity. To reduce the income and taxes, retirees can withdraw money from CD and put it into an annuity. “Putting the money in a single premium or variable annuity allows you to defer income until you need it,” said Kring.An advantage of an annuity is that you do not need to draw on the money until you want. With an IRA, on the other hand, the money grows tax, but you must start making withdrawals when you reach age 70 1 / 2, Kring noted. These required IRA withdrawals affect your tax situation.With a single payment of pension, where the rate of return is guaranteed, a retiree has the comfort of knowing that his money to win. However, if you block rates now and the market turns, your return may be much lower than you could get through stocks, Kring noted. And once the money is in the annuity, your investment is not liquid.A variable annuity, when you select investment options, shall give you the opportunity to earn more if the market goes – but your income may also file with the market. Liquidity can be a problem, too, depending on what you bought, “says Kring.”An annuity can be as simple or as complicated as you want,” says CFP, noting that buyers can choose options such as a nursing home care of the clause, the guarantee of return or death benefits. Be sure to include an annuity contract before signing.Investing in real estate investment trusts, where the dividend is partially deferred, due to the depreciation passage, is another way to invest money that you do not need immediate income and reduce taxes.If you want to reduce your taxes, but incomes are still necessary, consider tapping into the value of your universal life insurance policy variable. If you take your first contribution, you have no tax on this money, “says Kring.Another strategy to reduce tax retirees often forget the good old home mortgage deduction. Many people want their own free and clear during their retirement years, but who may not be the best option. Even if the amount of mortgage you can deduct the interest is not very large, this can help you meet the IRS threshold detail your deductions rather than take the standard deduction, Kring said .Retirees who have a good handle of where the money comes from and where it goes may be able to use some of these strategies on their own, others may need help d a financial advisor.If you are in the year of retirement, Kring recommended to do some planning to determine your income needs in retirement and see how it plays to the image of the tax. Then you can choose the benefits that work best and pass assets according to your situation.If you do not do tax planning before you retire, taxes on social security benefits can come with another surprise: unless you submit a Form W-4V, Voluntary Withholding request, the administration of Social Security, income taxes will be eliminated from your control of social security. You will be responsible for making quarterly estimated tax payments and you could face a penalty for default of such payments or underestimate how much you must pay each quarter. So a little planning can help you avoid major headaches tax.on that: lifeinsurance

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