The Guide To Social Security – How To Pay Fewer
May 22nd, 2010 | 
Author: The Guide To Social Security – How To Pay Fewer Taxes
Most individuals in or near retirement have three financial legs to support them in retirement: Social Security benefits; qualified retirement savings 401k IRA 403b etc. on which taxes have not yet been paid; nonqualified savings and investments on which taxes have been paid on the principal and possibly some or all of the earnings. By carefully coordinating the use of these three sources of money the typical retirementminded couple can add up to 20 to their aftertax income and afford a better retirement lifestyle. Unfortunately most couples in or near retirement overlook the importance of coordinating the uses of their available money. The results are higher tax bills and lower lifestyles in retirement. Both can be avoided.
In what follows you will be shown how the typical retired couple can add as much as 20 to their aftertax retirement income just by coordinating when to use the different categories of their money. There is nothing to buy no risky investments to make or additional money needed: you just use what you have smarter. This is very important for a married couple because one spouse could spend as much as onethird of their lifetime in retirement.
Conventional wisdom says to delay the use of your qualified money as long as possible in retirement because it grows faster due to the tax deferral. Generally the conventional wisdom is wrong. The millions who have heeded this inappropriate advice will have less aftertax money to support them in retirement. This Guide will show you that qualified money should be used first so you can delay taking Social Security benefits as long as possible. There are also tax advantages to using your nonqualified money last in retirement. This timing can give you more aftertax income in retirement and a better lifestyle.
Unless you have substantially more money than needed for retirement it is foolish to pay taxes you can avoid by simply changing the timing of how your three categories of money are used in retirement. The typical retiree’s greatest fear and also the greatest challenge is to not run out of money before they run out of breath. Many are in danger of losing this battle because the Center for Retirement Research is now reporting that 43 of U.S. households headed by workers ages 3460 are in danger of having 90 or less of the money they’ll need to maintain their lifestyle in retirement. According to one recent study reported in Retirement Weekly:”The average American family is on track to replace 57 of its annual preretirement income some 28 percentage points less than the minimum 85 figure experts typically say retirees will need to live on in their golden years”.
You can stretch your retirement money by up to 20. Before we can discuss when and how to use the three categories each needs to be identified and defined. You may receive other categories of money e.g. inheritance life insurance benefits loans reverse mortgage proceeds trust income lottery dream on and support from family members but these will not be discussed in this Guide. Also in the following discussion we’ve assumed the “average” retirementminded couple; however there are many exceptions and we recommend you seek professional advice before taking action.
Get the details! Read my free eReport and watch a 10min video overview at the Retirement Pros at:
http://www.theretirementpros.com/eReport_Social_Security.php
About the writer: Dr. Smith has an earned Doctorate in Economics from Iowa State University of Science and Technology along with a Bachelors and Masters degree in Economics from the University of Wyoming. He started his professional career as a college professor and held professorships at several Midwestern and Southern universities. He entered the corporate arena as the Chief Economist of a Regional Federal Home Loan Bank moved then into the banking business where he served as Economists Chief Financial Officer President CEO and Chairman of several institutions. He started a financial marketing company that catered to financial institutions and their clients by providing investment products. For the past twenty years Dr. Smith has been providing consultation and services to conservative investors and savers positioning their assets for retirement. In the process Dr. Smith has managed a broker dealer and held licenses that allowed him to offer securities and insurance products to the general public. He is currently the ask the expert at the Retirement Pros a senior officer at BHC Marketing Ltd. and writes newsletters and other retirement articles for the retirementminded.
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