Don’t Move to Another State Just to Reduce Your Taxes

 "We know lots of friends who are considering moving from a high-tax state, such as New York, to a state with low or no state income taxes. They think they will end up with more money, although they are torn because they may also be moving away from family and friends just to escape state taxes."

"What I advise them to do is think about spendable income — the amount they’ll have to spend after taxes — and not just low or zero tax rates. If you have more money to spend after paying the tax bill wherever you currently live, you might as well stay where you are, if it’s closer to the grandkids. You may be able to pay for at least one warm-weather winter trip, too."

States differ in how they tax Social Security, annuity, and other retirement income sources. Moving is expensive and it's critical to spend a considerable amount of time in the place where you plan to move before taking the plunge. If you want to move to Arizona or Florida you better spend the summer months in a rental to be sure you can stand the summer heat.

Author of this information is Jerry Golden is the founder and CEO of Golden Retirement Advisors Inc. He specializes in helping consumers create retirement plans that provide income that cannot be outlived. Find out more at Go2income.com, where consumers can explore all types of income annuity options, anonymously and at no cost. 

https://www.kiplinger.com/retirement/604701/dont-move-to-another-state-just-to-reduce-your-taxes?utm_source=SmartBrief&utm_medium=email&utm_campaign=CF0AD36C-92F4-4017-91C4-EE282853C9F8&utm_content=C7FBD63B-8ADA-4C50-9229-45E07316084D&utm_term=3b885bc7-e5d4-4ab6-9feb-bfe383bd6165

Responsibilities of an estate executor

"An executor is responsible for sorting out finances such as assets, liabilities, taxes, etc. of the deceased and distributing the assets to the heirs. An executor is not required to be legal or financial expert but takes on a fiduciary duty by maintaining highest degree of trust, impartiality, good faith, diligence and honesty" explains Komal Matwani, writing for WealthManagement.com. Get the details at: https://www.wealthmanagement.com/estate-planning/responsibilities-executor-explained

In some states like Utah, the term for an executor is "personal representative."   

Widow Brain: What To Expect After Your Spouse Dies & 9 Ideas to Help

Elliott Appel provides the following perspective and advice:

"Losing a spouse and becoming a widow is a life changing and emotional experience. 

Emotions come and go: anger, fear, sadness, grief, loneliness, pain, shock, guilt, worry, and more. 

Brain fog, or “widow brain” can appear, causing even more frustration. 

Let me begin by saying everyone experiences grief differently. Widow brain affects people differently. There is no uniform grieving process with a step-by-step timeline of what will happen. 

It’s a mish mash of time and emotions. Each person’s experience is unique. At the same time, there are commonalities people share that resonate with others. 

Let’s look at what widow brain is, what you could experience, how long it may last, ideas to help with widow brain, and wrap up with a few financial planning ideas to help make your financial life easier."

Details at: https://kindnessfp.com/widow-brain/

7 Steps to Estimating Your In-Retirement Cash Flow Needs

 Like many of my posts I'm sharing links to excellent advice from other writers. Christine Benz from Morningstar offers suggestions on how to plan for spending needs in retirement. 

"Ultimately, it may be difficult to forecast your actual income-replacement needs with a great deal of precision. Even as you attempt to anticipate every in-retirement expense to the penny, unforeseen expenditures such as healthcare costs can buffet spending around on a year-to-year basis. But because anticipated income needs are such a key ingredient in the retirement-income puzzle, it's helpful to come up with as realistic a figure as possible while also being realistic that your own expenditures are apt to vary over time."

The 7 steps are: 

Step 1: Find a Realistic Baseline

Step 2: Subtract Your Savings Rate

Step 3: Subtract Any Tax Reductions

Step 4: Subtract Any Anticipated Housing-Cost Changes

Step 5: Factor in Lifestyle Changes

Step 6: Add Higher Healthcare Costs

Step 7: Add Inflation and a Healthy Fudge Factor

For all the details: https://www.morningstar.com/articles/839519/7-steps-to-estimating-your-in-retirement-cash-flow-needs

 

 

 

 

 

Understanding federal income taxes and marginal tax rates

There is a tremendous misunderstanding about marginal income tax rates which are the highest rate at which your income is taxed. Income is taxed at increments by the IRS. Below is an example for a single person. Rates are different for married persons filing jointly and heads of households. the purpose of this example is to illustrate the graduated, progressive nature of federal income taxes. Unfortunately many states have adopted flat tax rates where all taxpayers pay at the same rate which is very regressive. Regressive taxes hurt low income people and benefit the wealthy (who have friends in state legislatures).

2022 Federal Income Taxes and Marginal Tax Rates

Standard deduction (SD) for single person 65 or older: $14,700. So, the first $14,700 of income is NOT taxed. After that see chart below shows how additional increments of income are taxed.

2022 Federal Income Tax Brackets and Rates for Single Filers
Tax Rate	For Single Filers
10%	$0 to $10,275
12%	$10,275 to $41,775
22%	$41,775 to $89,075
24%	$89,075 to $170,050
32%	$170,050 to $215,950
35%	$215,950 to $539,900
37%	$539,900 or more
Source: Internal Revenue Service

For example, if your total income for 2022 is $50,000, the first $14,700 is not taxed. So only $39,725 is taxable; of that $10,275 is taxed at 10%, the remaining $29,450 is taxed at 12%. So the marginal tax bracket is 12%.

If you have taxable income of $100,000, the first $14,700 is not taxed. $10,275 is taxed at 10%, $31,500 is taxed at 12%, the remaining $28,825 is taxed at 22%; your marginal tax bracket is 22%.

In sum, the first $14,700 is not taxed. Then each additional increment is taxed at a higher rate but that higher rated only applies to the additional income. So, for example, if you earned $60,000, only the final $3,525 would be taxed at 22%.

The first $14,700 of income is NOT taxed.

The next $10,275 is taxed at 10%.

The next $31,500 is taxed at 12% (up to $41,775 of taxable income)

The remaining $3,525 would be taxed at 22%. So, your marginal income tax rate is 22%. If you earned an additional $100, you would owe $22 in tax.

If you had more than $89,075 + $14,700 ($103,775) your marginal tax rate would be 24%. If you had $104,000 of income, only the additional $25 would be taxed at 24%. Your marginal tax rate applies only to the final increment of income. 

 

 

College Planning Guide for Students With Learning Disabilities

 "Learning disabilities present unique challenges when you’re planning to attend college. The National Center for Learning Disabilities conducted a survey in 2016 of 800 parents, and 72% said it was hard finding information about college disability services. For these students, getting the right information and support to excel in college requires a persistent strategy."

"In this extensive planning guide, we give you the tools you need to be successful in understanding the college environment for students with learning disabilities as well as your rights and potential accommodations. Whether it’s in-person or online college you’re pursuing, we’ll show you where to find the best resources to achieve your goals."

See: https://www.intelligent.com/college-planning-guide-for-students-with-learning-disabilities/

IRA Contribution Calculator

Individual Retirement Accounts (IRAs) are a great way to supplement employer-sponsored retirement accounts or for self-employed persons who are responsible for their retirement planning.

"Choosing the right retirement account can be complicated—but it doesn't necessarily have to be. Our IRA Contribution Calculator will take you through what you need to know to make an informed decision. Input your information below and see how much you can contribute to a Traditional, Roth, and SEP IRA account this year."

Learn about the various IRA accounts for the employed or self-employed and find out how much you can contribute this year at: https://www.sofi.com/roth-ira-calculator/