Jump-Start Your Retirement Plan, September 2014
Kiplinger is teaming up with the National Association of Personal Financial Advisors (NAPFA), whose planners will answer questions on retirement planning and other financial challenges. Submit your questions here and get free personalized financial advice on Thursday, September 25, from 9 a.m. to 5 p.m. ET.
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Carl S., From the following SSA website:Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.Benefits Planner: Income Taxes And Your Social Security Benefits
Social Security delivers a broad range of services online at socialsecurity.gov. We have a proud history of protecting the integrity of our programs and service to the public.
No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:
file a federal tax return as an "individual" and your combined income* is
1. between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
2. more than $34,000, up to 85 percent of your benefits may be taxable.
3. file a joint return, and you and your spouse have a combined income* that is
between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
more than $44,000, up to 85 percent of your benefits may be taxable.
4. are married and file a separate tax return, you probably will pay taxes on your benefits. -
My final question for the day is this, with the proceeds from my primary residence sale(2-3 years), would I be better off investing the proceeds not needed for a retirement home into a tax exempt muni bond fund, or put it into a taxable credit union? Either way, I may need to tap into some of it for future needs such as a daughter's wedding or dream vacation. Annuities would be out since it would "lock" away the money for the future. -
David, I love that you are using Vanguard. Just be sure you aren't too concentrated in one sector with the stocks. You can analyze your portfolio composition at morningstar.com. I don't think it is a premium service but I am not sure. In the meantime, remember that buying "ugly" (vs. buying the hot stock everyone is talking about) can be a good idea over time. Buying low (which means increasing your allocation to loosing sectors) and selling high (decreasing the allocation to winning sectors) is what rebalancing is all about. -
Last question for me ????. I was with a company for 6 years, contributed to the 401K and Roth 401K they offered. Our facility got bought out by another company and I'm not sure how long I plan on being with this current company. I'm trying to figure out what to do with my 401K from my previous company. I am contributing to a 401K with my current employer and they say I can rollover my old 401K into theirs. What would be the best option: Rolling over into current employer's 401K, rolling over into an IRA, or keeping it as is in the old employer's 401K?
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We've had some questions about whether you should tap a traditional IRA early in retirement. Here's the case for why you should consider it: A New Rule of Thumb for Tapping Savings -
Trecia, it depends on what investments are available in the new company plan. If they are good AND have low expenses, rolling over to them could be fine. Of course, if they do NOT have a ROTH option, you will need to roll that ROTH portion to a ROTH IRA. Use a discount brokerage like Schwab, TD Ameritrade, Fideltiy, Vanguard, or Scott Trade. If you don't know what to invest in I suggest looking at Vanguard target retirement date funds.
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This story can help you figure out what to do with a 401(k) from a previous employer -- Check Options Before Rolling Over a 401(k)
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Skorka, you can find one near you here: -
Hi Ken - Good question. I'm guessing you are 60 and could even make withdrawals from your 401k if you wanted to without any tax consequenses (you would give up the tax deferral feature on those assets though). Capital gains are currently taxed at pretty low rates, lower than the higher tax brackets, and at low levels of income capital gains are taxed at zero. Check with a tax professional on how to best plan.
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Lou, the best ways to earn more interest on your savings --
Best Ways to Earn More Interest on Your Savings-Kiplinger
www.kiplinger.comKiplinger lists the top spots for eking out interest on your savings, depending on your tolerance for risk and how long you can tie up your money. -
We are currently in the 28% tax bracket but will go down to the 25% bracket upon retirement in 3 years. My spouse is currently 59 and I am 61. We have retirement assests in both traditional and Roth Ira's and 401K's, as well as taxable accounts. We are the most tax-efficient way to w/draw assets both during the period before we reach FRA and afterwards?
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Kiplinger article: A New Rule of Thumb for Tapping Savings - Everyone should read this. If you do have a year in retirement with little taxable income you may want to take an IRA distribution even if you don't have to as you may pay little or no tax on it. CAUTION: be sure to model this with your tax preparer before you proceed.
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tks, I would suggest putting some of the proceeds from your home into an emergency fund (health care, etc) and a separate fund allocated for special purposes (wedding for your daughter, vacation, etc.) the remainder to be invested depends on when you think you may need the money and tax situation. For the shorter timeframe, short-term bond funds and if in a high tax bracket, tax exempt bonds and if lower income tax bracket, taxable bonds. Longer timeframe investments would benefit from Intermediate term bond funds. Anything over ten year investment timeframe, S&P 500 stock index funds.
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