Investing Terms 101

Baby boom generation age into retirement — approximately 10,000 Americans turn 65 every day — more and more are relying on pension benefits for their main source of income.

Millions of aging teachers, firefighters, sanitation workers, and other state and local government employees depend on the income owed to them through defined benefit pension plans. Such plans require employees to contribute a portion of their salaries to a pool of funds that is invested on their behalf and is paid out to them in retirement.

Poor management of the pension funds at the state and local levels, however, has put those benefits at risk for many future retirees. According to nongovernmental organization The Pew Charitable Trusts, pension systems currently have, on average, less than 70% of the assets they need to be able to pay out benefits owed to current or retired public employees. In some states, the gap is significantly smaller, while in others the pension funding gap is far worse.


Every State’s Pension Crisis Ranked


The IRS wants its Money after all these years of “Deferring Taxes

Preparing for retirement requires a lot of adapting — not just emotionally, but financially. The closer you get, the more important it becomes to look at your budget, your asset allocation and where your income will come from when you’re creating your own paycheck.

It’s also critical to make tax efficiency a priority in your planning Before Retirement

Taxes can take a giant bite out of retirement income year after year. And yet, even people who have done a great job of investing and saving for retirement tend to overlook the tax planning that’s necessary to hold on to more of their nest egg. How can proactive tax planning help you land in a lower tax bracket during those early retirement years? One move might be to delay taking your Social Security benefits for a few years, or it may not matter as Social Security may be taxed anyway based on your income in retirement. There are solutions to help buffer your tax liabilities and increase income

You’ll be taxed on: up to 50 percent of your benefits if your income is $25,000 to $34,000 for an individual or $32,000 to $44,000 for a married couple filing jointly. up to 85 percent of your benefits if your income is more than $34,000 (individual) or $44,000 (couple)

Solutions: additional income (most do) during those years, you might choose to mitigate future tax ramifications NOW, the sooner the better, by implementing tax free strategies (tax free income) to compensate for loss income do to taxes in retirement. Often this strategy can provide up to 50% more at retirement.

Evan Comen

October 11, 2019 3:59 pm
Last Updated: February 17, 2020 12:48 pm


Did you know these are Tax
Codes not retirement plans

  • 401(a) 401k (Defined Contribution plan)
  • 408 RA (Individual Retirement Account)
  • 403(b) Tax Sheltered Annuity (teachers)
  • 407(b) Non-Qualified Tax-Deferred Compensation Plan
  • 408(a) Roth IRA
  • Simply Put, TAX Code,s That Allow Certain Types Of Tax Treatment for the use of Retirement Investing.
  • There are rules and regulations on how money is contributed and how it is distributed.