|
by: Ken Morris
What will you look for as you approach your “golden”
years? Will it be an affordable condo on the golf course with
room for the grandchildren to visit? Must it be close to friends
and family or new “senior” friends living close
by? Should it be near good medical facilities?
The average householder 65 or above earns only two-fifths
as much as earners age 45-54 (who are at their peak earning
years). Even though many “goldenagers” are now
free from the encumbrances of children and work-related expenses,
the costs of daily life must be planned. Income must be protected
to assure its availability for household expenses and higher
health care costs.
The “goldenagers” have even more than lifestyle
questions to consider in choosing their retirement nest. You
should take a look at the effect of state tax structures on
your projected retirement income. It’s important to
look at the following key tax areas:
? TAXATION OF EARNED AND INVESTMENT INCOME
If you plan to continue working, you need to take a look
at the way states vary in taxing your income. Some states
do not make an exception for age, some give tax breaks and
some do not tax earned income at all for “goldenagers.”
? PENSION INCOME TAXATION
Many “goldenagers” depend on the income from
military, government or private pension plans to survive.
Some states exempt all pension income from taxation , others
exempt only certain types of pension income and other states
place caps on non-taxable pension income.
? TAXES ON SOCIAL SECURITY BENEFITS
Social Security benefits are important to all “goldenagers.”
Some states do not tax this benefit at all, some follow federal
tax formulas for determining taxes on the benefits, but still
other states have their own formulas to determine the tax
due.
? PROPERTY TAX
Some states offer advantages to “goldenagers”
such as homestead exemptions that can be helpful in reducing
property tax burdens. Remember to check the tax laws regarding
taxes on personal property, especially cars and boats.
? SALES TAX RATES
Nearly every state, and often localities within each state,
tax clothing, gas, household goods and sometimes even food
and drugs. When you budget your fixed income for these items,
remember to consider the sales taxes as you move to your retirement
nest.
? ESTATE TAXES
Even though these taxes will not affect your cost of living
as a “goldenager,” they should be considered as
you build your nest. Some states tax the surviving spouse
on a portion of the inheritance which in another state would
pass to him or her without being taxed. States are studying
how to make their financial environments “friendlier”
to seniors so watch for changes in state estate tax codes.
A decision for your “golden years” cannot be
based on any one tax consideration. You need to examine your
overall financial situation and consider the options in the
attempt to make your retirement nest free from financial stress.
About The Author
Ken Morris
Fearing the American worker is being left in the dark, Mr.
Morris, a fee based Investment Advisor Representative with
Raymond James Financial Services, Inc., helps 401k participants
get the most out of their retirement plan.
raymondjames.com
|
