April is a transition month in Southern New England as the winter chill exits and the warm spring sunshine returns with a renewed feeling of rebirth as green leaves emerge on bare branches of trees and the barren soil comes alive with the beauty of flowering plants. Another sign of spring is tax season which can have unexpected complications for retiring seniors.
If you are nearing retirement or newly retired, tax returns do not necessarily become simpler and may in fact be more convoluted than ever. For most people in retirement, they drop into a lower tax bracket and pay less taxes, but if you saved wisely and hoped that your financial life would become less burdensome, you may be rudely awakened.
For retirees with 401K tax deferred accounts, they must start taking minimum distributions after the age of 70 ½. These distributions, on top of other income, can move seniors into a higher tax bracket. Even social security benefits may be taxable if the income is above a certain level.
Under a formula developed by the IRS, half of Social Security benefits are added to additional income retirees receive and if that amount exceeds $25,000 for singles or $32,000 for married couples who file jointly, part of the benefits will be taxed.
Developing a good estate plan is crucial in maximizing the preservation of an individuals assets. This also includes long term care planning to protect what someone has worked for their entire lives. Connelly Law's total wealth management planning maximizes your income while providing the necessary asset protection to guard against issues that can arise with age. Early planning is the key to long term peace of mind.