Now, instead of payroll deductions, retirees are dealing with mandatory medical deductions such as Medicare Supplement insurance premiums, Medicare premiums, and payments for long-term care support services. There’s also a myriad of health-related deductibles and coinsurance amounts to worry about.
Clients need help from financial professionals to learn suitable insurance solutions to create more discretionary retirement income so they can plan ahead for the upcoming mandatory deductions. For instance, when considering income taxes, products such as life insurance products and tax deferred annuities can reduce tax payments. Municipal bonds and tax-free income from Roth IRAs can also have a positive impact on reducing tax outlays.
For each mandatory deduction there are products available to help reduce the amount of retirement funds paying for each of them. This is why financial professionals need to stay up-to-date on the new mandatory deductions, making their services more valuable to their clients.
The Annual Retirement Income:
- Social security
- Pension income, if any
- 401(k) withdrawals
- Investment income withdrawals
- Work income, if still in the workforce
- Annuity payments
- Other sources
- Total Retirement Income (A)
- Federal and state income taxes
- Medicare part B and D premiums
- Medicare Supplement insurance premiums
- Long-term care insurance premiums or out-of-pocket expenses
- Medicare deductibles and coinsurance amounts
- Support for children or grandchildren
- Total Mandatory Deductions (B)
- Net Retirement Income (A) – (B)
For financial professional use only.
The tax and estate planning information contained herein is general in nature, is provided for informational purposes only, and should not be construed as legal or tax advice. Partners Advantage does not provide legal or tax advice. Partners Advantage cannot guarantee that such information is accurate, complete, or timely. Laws of a particular state or laws that may be applicable to a particular situation may have an impact on the applicability, accuracy, or completeness of such information. Federal and state laws and regulations are complex and are subject to change. Changes in such laws and regulations may have a material impact on pre- and/or after-tax investment results. Partners Advantage does not assume any obligation to inform you of any subsequent changes in the tax law or other factors that could affect the information contained herein. Partners Advantage makes no warranties with regard to such information or results obtained by its use. Partners Advantage disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Always consult an attorney or tax professional regarding your specific legal or tax situation.