CRITICAL MISTAKES TO
AVOID IN RETIREMENT
Download our FREE retirement guides.
Discover the critical mistakes to avoid and how to safeguard your financial future.



CRITICAL MISTAKES TO
AVOID IN RETIREMENT
There is a very practical aspect to taxes. Many of the decisions you make in retirement will have tax implications. The new tax law of 2017 impacts many of these decisions. Whether or not you use a professional to look forward at those implications is your prerogative. It is important to understand how taxes are different in retirement and how to avoid some very common tax pitfalls.
Important concepts you will need to have a basic understanding of include personal deductions, marginal tax rate, capital gains and qualified dividends, RMDs, filing strategies, tax credits, Medicare and taxes/income, and taxes on Social Security benefits. Failure to recognize the challenges of taxes in retirement can have dire consequences for not only you but your beneficiaries as well.
You may not consider yourself a net high-income earner but RMDs and Stock distributions in any given year can have dramatic consequences in coming years and impact the premiums you pay for Medicare or the amount of your Social Security benefit you pay taxes.
There is an old saying that this or that is as certain as death and taxes. In death you (or your estate) can not get away from taxes. Even if your estate is well below the minimum exemption limits, your loved ones could be subject to devastating taxes unless you have properly prepared your financial affairs. At Romero Retirement Strategies we work with tax professionals to help you plan taxable income to minimize adverse tax issues.
-Fill out the form here to download and read the entire report-
In the early stages of the accumulation phase of our financial lives our principal objective was to make more money. One of the first things we learned in Personal Finance 101 was the concept of compounding. We learned that it was possible to earn interest on the interest that we earned when added upon the interest we had earned before that. We may have taken on more risk because we had time to get back the gains we may have lost to the market. The good years were good and the bad years seemed to spread over longer periods of time.
Compounding may have driven us to raise the expectations of what our income funds would amount to in retirement, and there seemed to be little reason to change our philosophy going into retirement. If it worked for 40 years of our working lives it should work for another 25 years, right? Well, maybe not so. Studies show that people that retire at the peak of bull market have a greater chance of out living their money.
While many revel in the accumulation phase of their financial lives, many may not be aware of the next phase: the preservation phase. This phase should begin about five years before our targeted date of retirement. This is the phase where steps may be necessary to help ensure that funds we worked hard to accumulate, sometimes through considerable risk, are available to us to use as income during the next phase of our financial life: the distribution phase.
When surveyed, more and more retirees are stating that their most valuable asset in retirement is Social Security. It also is the part of retirement planning that generates the most questions and can be the most confusing. It is no longer just a matter of “when do I take my benefit”. Your retirement date and the date you begin your Social Security benefits do not have to be the same. However, making certain decisions concerning Social Security can cost you tens of thousands of dollars in retirement.
Social Security provides a foundation on which to build retirement security. However, Social Security benefits were never intended to be someone’s sole source of income in retirement, these benefits must be supplemented.
They can however, account for up to 60% of some people’s income in retirement and needs to be planned for like a separate asset class. This is a guaranteed income stream and can play a more significant role in the later years of retirement than the early years as other income sources start to drawdown. Planning on how and when to address Social Security is an important part of our client’s investment strategy.
How are my benefits taxed? What about spousal benefits? Won’t my Spouse get have my benefit? If I die, what benefit does my spouse get? Can I File on my ex’s benefit? Should I take my benefit early? So many questions and yet the Government can not give you Social Security strategy planning advice. And many financial professionals do not have a working knowledge of Social Security. We are here and have the ability to help answer your Social Security questions.
This website and the licensed insurance agent are not affiliated nor endorsed by the Social Security Administration (“SSA”) or any other government agency. Only the SSA can determine and pay social security benefits.
On the surface it may seem as a pretty simple proposition; When you reach age 65, you get Medicare. And if it were that simple then it would not be on the list of potential mistakes to avoid in retirement. The decisions you will make on Medicare may be some of the most important decisions you will make. Understanding the basics of Medicare could help you avoid potential mistakes. Understanding what Medicare pays and when it pays it, could help to eliminate a great deal of these projected expenses.
Medicare will not pay all the medical cost you incur during your retirement years. There are insurance options available which can pay most of these costs. One plan does not fit all consumers and the plan your neighbor bought might not necessarily be the best plan for you. Choosing the right supplemental plan can help preserve valuable retirement dollars.
If at age 65 you are still working, you may want to investigate the option of delaying your Medicare Part B benefits. If you are ten years out from being eligible for Medicare but do not qualify for Part A without paying premiums, now is the time you may want to find out how to bridge this gap. You likely should purchase prescription coverage or Part D even if you do not take premiums. At Romero Retirement Strategies we can help answer your Medicare questions.
Fill out the form below to send us a message.