Taxes and Your Retirement

July 25, 2017

At his Hollywood height, President Reagan was making $400,000 per movie. In 1981 the Washing Post quoted President Reagan saying he would only make two movies per year because of the 90% tax bracket. This is when taxes became an important issue to him. Although we don’t pay a 90% tax bracket, do we have it any better?

Tax Bracket: Do We Have it Good Right Now?

Benjamin Franklin said it best, “In this world nothing can be said to be certain, except death and taxes.”

We may not have a 90% tax bracket but, we do have taxes and just like clockwork they come every year. Due to the confusing and puzzling nature of taxes, many people don’t understand how they work. They just know if they don’t pay taxes, there are consequences. People don’t understand they could be paying a higher tax bracket than the 39½% tax bracket. Because of the way social security works, people do not realize they are paying higher taxes than the highest tax bracket.

One individual’s tax situation is different from the next. There are definitely different solutions out there for how to combat that and ensure you are in the correct bracket. By meeting with an experienced financial advisor, they can ensure you are in the correct tax bracket and only paying what is necessary.

Do You Have Enough to Leave your 9-5?

You can turn to any news channel, and it will tell you hundreds of different ways to determine how much money you need to retire. However the number that matters the most is your risk number. How much are you willing to gamble and risk in your retirement to ensure financial success? Our goals at Ashton Wealth is to first look at pre-retirees spending habits and income needs. We then reverse engineer the plan to determine what kind of assets they’ll need in retirement to achieve those income goals and leave their 9-5 job.

Health Care and Your Retirement

What steps can you take to ensure you can afford excellent healthcare coverage in retirement? This is a common topic in the new presidency and is the number one questions we get at Ashton Wealth. It is extremely expensive for retirees right now. On average, retirees will spend over a quarter of a million dollars in their retirement. That is a high price considering retirement is on only about 20 years!

However, most people don’t know there are different vehicles out there that provide different avenues for cash to help out in a health emergency. If your financial advisor isn’t providing you these different options, they haven’t done enough for you.

How Much Should You Spend on Retirement?

It’s becoming more common and more common for people to spend more than they make. Far too often people see money go into their account and they immediately spend it. If you want a successful retirement, you need to have untouchable money each month you put away for retirement.

Every month, you should be saving 10-15% of your income. We understand that situation is different and some people can save more and some people can save less; that’s okay! As long as your making steps to save for your retirement, you are on the right path. If 10-15% is unrealistic, even 1-2% each month is better than nothing.

It is safe to say that we have it better than President Reagan in the 1980s. However, that does not promise it will continue to get better or even stay same. Being prepared for changes in the economy is essential to a happy and successful retirement.

If you’re unsure about your financial status in retirement, speak to a financial advisor today! To learn more about annuities and retirement planning, contact Ashton and Associates at questions@retirementbrothers.com.