Category: Financial and taxes in retirement
April 30, 2013 -- Note: This is part 2 of our Most Tax Friendly Places for Retirement series. Part 1 was "Finding Your Tax Friendly Place for Retirement".
Let's assume that you are a person looking for a tax-friendly state to retire. You need to start your search by realizing these key facts: your tax situation is going to be different in retirement from what it was during your working days, and because of that some of your current tax assumptions might no longer be valid. Here in Part 2 we will discuss some of the key tax issues that affect retirees, as well as provide a checklist to help organize your thinking.
A Key Change - Different Income
In retirement your income will probably be
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Published on April 30, 2013
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Category: Financial and taxes in retirement
April 29, 2013 - A front page story in yesterday's New York Times spotlighted the newest way for retired Americans to get into serious financial trouble. The story, "Loans Borrowed Against Pensions Squeeze Retirees highlighted the growing trouble in Pension Advances. The idea behind them is that in exchange for an upfront advance (called an advance, but really a loan), you sign over your pension checks far into the future. Cash-strapped and often unwary retirees are increasingly using these loans, but paying interest rates and fees from 27% to as high as 106%.
The article used the experience of Ronald E. Govan as an example. This disabled veteran took out a $10,000
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Published on April 29, 2013
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Category: Financial and taxes in retirement
April 16, 2013 -- Millions of baby boomers have been forced into earlier than intended retirement. Surviving that experience has become a brutal challenge. A study from the Urban Institute, a Washington think tank, found that it took more than nine months for half of those over 50 to find a job. Many have not been able to find a job, and have either given up the search or gotten creative about how to survive on their reduced incomes.
3 Boomers Profiled
The Squared Away Blog from the Center for Retirement Research recently profiled 3 baby boomers who are experiencing the struggle to survive. The profiles will sound familiar to many.
Kevin Milligan, an economics professor at the University of British Columbia, determined that two-thirds or more of jobless Americans between
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Published on April 16, 2013
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Category: Financial and taxes in retirement
Updated Oct. 10, 2020, originally published April 15, 2013 -- For a significant percentage of retirees, finding a tax-friendly location to retire is very important. But, while indeed there are many states and localities that are very tax friendly, making a decision based simply on taxes could lead you to a poor choice. For example, how your personal situation interacts vs. different state scenarios might be surprising. And more importantly, lifestyle and other considerations might be a lot more important to your retirement happiness.
This is Part 1 of a 2 part series: In this article we will explore the various kinds of taxes that might affect you as a retiree; Part 2 is "Finding a Tax Friendly State for Retirement: A Checklist", and it features a helpful checklist for you to evaluate your tax situation vs. states you might be considering for retirement. See also this MarketWatch article on "Tax Friendliest States" for a slightly different perspective.
Major Taxes in Retirement
The major state taxes you need to be concerned about are property taxes, income taxes, sales taxes, estate and inheritance taxes, and how your pensions, IRA distributions, and social security will be taxed. All of these factors
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Published on April 15, 2013
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Category: Financial and taxes in retirement
February 26, 2013 -- If you search on the Internet for "live like a cheapskate" you will strike a frugality bonanza. There are authors like Jeff Yeager who have written best sellers on the subject ("The Cheapskate Next Door"), plus plenty of websites offering their advice. There's even a TLC show, "Extreme Cheapskates". Our friend Robert Powell over at MarketWatch had a particularly helpful article earlier this year, "How to Retire Like a Cheapskate and Live Well". This article will roll up advice from all over into our 15 top tips for living like a cheapskate.
First of all, a little etymology - if you are going to be a cheapskate you might as well understand where the term
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Published on February 26, 2013
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Category: Financial and taxes in retirement
January 23, 2013 -- There is no polite way to say this, so we will just be blunt - America's baby boomers have a frighteningly poor command of the facts on when to start claiming Social Security. We not only aren't acquainted with the facts, but we also have some wide-ranging misconceptions. That's the conclusion of most experts we talk with, as well as a steady beat of newspaper and web articles. The latest came in today from WSJMarketWatch, "Most Fail to Maximize Social Security Benefits".
Your editor regularly experiences this lack of knowledge on a first hand basis - even among college educated, highly successful, and otherwise financially savvy folks. To help overcome the knowledge gap, this article will cover the 7 major myths that
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Published on January 23, 2013
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Category: Financial and taxes in retirement
January 8, 2013 -- By now you have probably heard the projections that Social Security will have exhausted the trust funds it built up for future payments by 2033. Unless something is done before then, starting that year payments coming in will only be able to fund about 75% of promised benefits. The New York Times just reported a new study by researchers at Harvard and Dartmouth, "Social Security: It's Worse Than You Think", that shows that the government is underestimating how long Americans will live and how much Social Security will need to pay out - which makes things even worse than
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Published on January 8, 2013
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Category: Financial and taxes in retirement
December 19, 2012 -- Legislation coming out of Congress in the next few weeks is likely to affect all Americans. Most of our federal tax rates will either stay the same, or we will fall off the fiscal cliff and rates will go up. As both parties state and restate their positions, there have been some new proposals that could potentially affect both social security and Medicare, both popular programs for baby boomers. Also in the news - cars that make driving easier for aging baby boomers.
Medicare
The latest proposal being discussed to help keep Medicare solvent is to raise
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Published on December 18, 2012
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Category: Financial and taxes in retirement
December 18, 2012 -- Long term care insurance is one of the more difficult products in the insurance world. Unlike most insurance products, the decision to buy it or not is not clear cut. While it's easy to see why you need insurance on your car, home, or health - justifying long term care insurance is a a bit tricky. According to some reports, only 10% of people over age 60 have long term care insurance.
The market has not been kind to providers of long term care insurance. Some, including Prudential and MetLife, have stopped selling new policies in recent years, while others have had to ask for rate increases of over 40%. Life insurers sell some "flexible" life policies that provide a cash benefit before death as a kind of long term care hybrid. Recently we've seen some helpful articles on long term care insurance (see end of article). Here is a brief primer; we recommend the references to get a fuller understanding.
Long term care insurance provides
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Published on December 18, 2012
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Category: Financial and taxes in retirement
December 8, 2012 -- Researchers at DePaul University and the Rush University Medical Center think they have found the underlying reason for an alarming rise in fraud committed against our rapidly aging baby boom generation. The explanation often arises from “that combination of not knowing but thinking you know", according to Keith Gamble, an assistant finance professor in DePaul’s Driehaus College of Business. In other words, overestimating what you think
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Published on December 8, 2012
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