COLUMBIA, S.C. (WIS) - Social Security will be most people’s biggest asset in retirement. As you get closer to retirement what can you expect and is Social Security income taxable? Josh Bradley of Capital City Financial Partners says yes.
Bradley says a lot of people don’t realize Social Security is taxable, generally between zero and 85%.
“... The first thing you want to focus on is basic claiming strategies. The difference between a bad strategy and a good strategy can be tens of thousands of dollars of lost Social Security payments over your lifetime,” Bradley says.
Is it possible to avoid paying taxes on social security? The financial expert says there are some things you can do to keep a little more of your money.
“The first thing we always focus on is Roth conversions. By converting more of your IRA to a Roth IRA you lower your required minimum distributions in the future which will lower your taxation. The second thing we do is we make your after-tax account a little bit more tax efficient. So, investing in things like stocks, life insurance, annuities is going to lower your taxable income. The last cautionary tale is a lot of retirees use municipal bonds for tax-free interest in retirement. However, that tax-free interest actually counts against you as it pertains to Social Security taxation.”
Another popular question Bradley receives is whether Social Security survivor benefits are taxable? Bradley says usually this situation takes a bad day and makes it worse. A person loses a spouse or partner, and they realize they’ll have to live on less income.
“Many times, we find now they also have to pay higher taxes primarily because of their deductions going down and they’re single bracket versus joint bracket,” Bradley says.
For more information, head to www.capitalcityfinancialpartners.com.