Social Security Retirement - 401k And Ira

Social Security Retirement - Will It Be Enough?

A lot of people are unaware that around 85% of their social security retirement benefits may well be subject to taxation. So there are a number of things a person should be looking at to find out how much of their benefits are taxable and what can they do in order to either reduce or eliminate these taxes.

The first things that a person should be looking at to see whether their social security retirement benefits are taxable or not and just how much is taxable is as follows:

    1. What is the actual income they have coming in on retirement?

    2. Do they have retirement income coming in form other sources not just from Social Security retirement benefits?

    3. Also when filing their tax return what is their marital status? Are they married or single?

In 1983 a tax was placed on Social Security retirement benefits by the Government and at the time was only based upon 50% of them. However in 1993 this was then increased up to 85%.

Certainly a married couple whose income is below $32,000 will have no problems in relation to the amount of tax that they pay on their benefits. However by the time their income is over this then they will begin to be taxed.

While for a single person whose income is below $25,000 then the benefits that they receive as part of their Social Security retirement plan are not taxable. However once their income goes above this level then it becomes taxable.

So if you are looking for some ways in which you can help to ensure that you do not pay as much tax once you retire is to carry out the following:

    1. It is important that they begin to reduce the amount of interest income they are earning.

    2. Also reduce the amount of dividend income that they are earning and receiving.

    3. Where at all possible a person should reduce the amount tax exempt interest income they are receiving.

It is best that they talk with their financial advisor about the above matters and hopefully by doing this they will be able reduce or eliminate the amount of tax they will have to pay on their Social Security retirement benefits.

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