REDUCE OR ELIMINATE THE BURDEN

Annuities and Financial Planning

If you are a married Social Security recipient, you know that one day you or your Spouse will be widowed. All too often, the tragedy of losing a Spouse is accompanied by a loss of income for the survivor. This income loss is the result of a reduction in Social Security benefits to the household upon the death of a spouse. The amount of lost benefits may be substantial, from one third, to one half, or even more.

Although tax exempt income is included in calculat- ing your combined income, a nonqualified annuity may help to reduce taxes on your Social Security benefits. Income that is left to accumulate inside a tax deferred annuity does not appear on your tax return and is not used in calculating your total income.

Therefore, moving money from a taxable investment to a nonqualified tax deferred annuity may help to reduce taxes on Social Security benefits. A key financial concern of many seniors today is the fact that, if your income is above certain limits, Social Security retirement benefits are taxable.

Taxes on Your Social Security Retirement Benefits

Social Security recipients have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income; such as, wages, self-employment, interest, dividends withdrawals from annuity contracts and other taxable Income that must be reported on your tax return, in addition to your benefits.

No one pays federal income tax on more than 85% of his or her Social Security benefits.

Individual: If your income is between $25,000 and $34,000, you may have to pay income tax on upto 50% of your benefits. More than

$34,000, up to 85% of your benefits may be taxable.

Jointly: If you and your spouse have a combined income that is between $32,000 and $44,000, upto85% of your benefits may be taxable.

Married w/separate return: You may pay income taxes on your benefits.

HOW TAX DEFERRED ANNUITIES CAN HELP?!

Life Insurance and Annuity

Although tax exempt income is included in calculating your provisional income, a tax deferred Annuity can help reduce taxes on your Senior benefits. Income that is left to accumulate inside a tax deferred annuity does not appear on your tax return and is not used in calculating your total income.

Therefore, moving money from a taxable investment to a tax deferred annuity can help reduce taxes on Senior benefits. You can possibly pay no tax at all on your Senior benefits if you shelter enough income inside a tax deferred annuity and your other income is below the base amount threshold. If your investments are generating taxable income, that income is counted when determining how much of your Senior benefits are taxed. Earnings that grow tax deferred inside an annuity are not counted toward your provisional income.

Annuity earnings will become taxable income when you withdraw them. Make sure you don’t immediately need the income before moving to a tax deferred annuity. Withdrawals in the early years could also incur surrender penalties.If you would like more understanding on how to help reduce taxes on your Senior benefits, please contact us at your convenience.

NEW GOVERNMENT CHANGES AND BENEFITS FOR SENIORS!

Latest annuity news

Congress has legislated increases in Senior benefit payments based on increases in the Consumer Price Index. If you receive monthly Senior benefit payments, there is a 1.5% cost-of-living adjustment starting with your December, 2013 benefits paid in January, 2014.

Specific cost-of-living increases are based on increases in the Consumer Price Index for Urban Wage Earners and Clerical Workers calculated by the Bureau of Labor Statistics. The earnings limit for people turning 66 in 2014 will be $41,800. $1 in benefits is deducted for each $3 earned over $41,800. There is no limit on earnings for workers who are at full retirement age for the entire year. Full retirement is age 66 for people born in 1943 through 1954. The earnings limit for workers younger than full retirement age is $15,480. $1 in benefits is deducted for each $2 earned over $15,480.

In addition to receiving extra payment each month, you may now earn more income without offsetting your benefits because the earnings test cut-off also increased. Based on the increase in average wages, the maximum amount of earnings subject to Senior benefit tax increased to $117,000 (from $113,700).