Massachusetts Senior Circuit Breaker Tax Credit The Massachusetts Senior Circuit Breaker Tax Credit has been around for a long time. But I suspect not everyone who is eligible takes advantage of it. Once in a while I come across someone, usually a client’s elderly parent, who is unaware they are eligible for this credit. When that happens they can file/amend the last 3 years of tax returns. This results in a $3,000+ windfall. Taxpayers may be eligible even if they aren’t required to file tax returns. This credit is available to both homeowners and renters. This article is specific to Massachusetts, but there are similar programs in many other …
Retirement
You Must Take a Distribution from Your IRA But Don’t Need the Money- Now What?
Recently, I was sitting with a client celebrating the fact that her IRA balance is nearing $1 million dollars. This is always an exciting milestone. I rang the bell for her. In 2023 my client will turn 72 and she will need to take a distribution from her IRA. The distributions are called Required Minimum Distributions. (RMDs) RMDs must also be taken from employer retirement accounts such as 401k/403b plans starting at age 72.* The starting age was recently changed, it used to be 70.5The amount that must be distributed is based on a calculation – more on that below. Why does the government require these distributions? Because in most cases the …
Have you looked at your Social Security statement recently?
The Social Security Administration recently started rolling out newly designed statements. The new statements graphically illustrate the increase in income from delaying benefits. Here’s the retirement benefit information from an old statement: From a different client, the retirement benefit illustration from a new statement: The new design helps workers get a better understanding of the income increase they can gain from delaying their benefits. It can make sense to delay claiming your benefit even if you have retired. It all depends on the numbers, but if you have other assets to draw on, holding out for a larger Social Security payment could be more …
Do you need permission to spend?
One of the best parts of my job is giving clients permission to spend. A typical situation is a retired client (or couple) who has spent a lifetime accumulating wealth. First, they followed the fundamental equation for reaching financial independence: They paid attention to the outgoing dollars. Maybe they looked for sales. Maybe they always drove used cars. Maybe they took modest vacations. Maybe they did all of these things and more. They didn’t really feel deprived and they weren’t concerned with keeping up with the Joneses. For decades they saved and invested -- often in employer retirement plans. At some point it was time to retire – sometimes …
Ladies, are you prepared to handle your finances on your own?
Start by asking the following questions: What do we own? All bank accounts, retirement/investment accounts, real estate, business interests. Where are these accounts and if they are all over the place, why? What do we owe? Mortgages, loans, credit cards, other debt. Do we have life insurance? What kind? How much? Who is the beneficiary? What is my financial situation if you die before me? “You’ll be fine” is not an acceptable answer. Where, exactly, would my money come from to live? Social Security? Pension? Life Insurance proceeds? Investment Portfolio? If necessary, sit down with a fiduciary financial advisor to help figure it …
