Social Security Recipients to Get a Small Increase

 

34468000 - social security and retirement income
34468000 – social security and retirement income

The Associated Press reports that seniors will receive a small (.3 %) increase in Social Security benefits in 2017.  The increase adds up to about $5 a month for the average retiree.  It is the smallest increase since the cost-of-living adjustments began in the 1970s. The increase will affect more than 60 million people — about 1 in 5 Americans. For retirees, the average monthly Social Security payment will be $1360. [Read more…]

What Happens If You Died Today?

Have you ever considered how your family would manage financially if you died today?  Whether or not you are retired or have older or younger children, could your spouse support himself or herself without your income?  Would your home have to be sold?  Would your children (or grandchildren) be able to afford college?  Would a probate estate have to be opened?  Even though death is an unavoidable part of life, far too few people are prepared for it. [Read more…]

Minimizing Taxes from Social Security Income

The IRS regulations for taxes on Social Security are confusing. As discussed in a Wall Street Journal article titled, “When Uncle Sam Wants His Money Back”, as much as 85% of a recipient’s social security benefit can be taxed. A person earning as little as $25,000, could owe taxes on up to 50% of his or her benefit.

To minimize taxes owed on Social Security income, one possible strategy is to convert your IRA into a Roth IRA. Any distribution from a traditional IRA will be viewed as income which could affected your social security benefit. However, qualified distributions from a Roth IRA are not taxed and therefore don’t effect benefits. It is important to note that the amount your transfer from a traditional IRA to a Roth IRA counts toward your taxable annual income so it is best to convert before Social Security benefits begin. [Read more…]

Understanding Taxes on Social Security Payouts

It is wishful thinking that Social Security benefits should be paid tax free. Beginning in 1984, a portion of Social Security benefits have been subject to federal income taxes. Unfortunately, there are no signs this will change any time soon.  In an article on Fox Business titled, “Ways to Maximize Your Social Security Payout”, some suggestions are provided to minimize taxes on your Social Security benefits.  [Read more…]

Social Security Confusion

In the January edition of our Elder Law Today newsletter, we explained how Congress had recently ended the popular Social Security strategy known as “file and suspend”.  This strategy permitted a primary wage earner to file for benefits, but suspend receiving them.  This allowed the other spouse to collect benefits based upon the primary wage earner’s Social Security contributions while the deferred benefit for the primary wage earner continued to grow.  The additional Social Security benefits could be significant – potentially exceeding more than $100,000 in lifetime benefits.  Congress did however grandfather those individual’s who turn 66 by April 29 to file and suspend under the old rule.  [Read more…]