Tuesday, November 28, 2023

The 561 Face of Taxes and Retirement Decisions

Elizabeth M. Bennett, MBA 
Principal and Certified Financial Planner™
Intercoastal Wealth Planning 

As the holiday season is upon us, tax time isn’t necessarily on your mind right now. But, if you are approaching retirement age, do yourself a favor and consult with your CFP® to understand the taxes that you may be incurring as you are approaching distribution phase of your financial assets,” advises Certified Financial Planner™ and Certified Financial Fiduciary, Elizabeth Bennett. 

“When you think about retiring and believe that you’re going to be in a lower tax rate, your tax rate could actually be higher, which in turn increases IRMAA. However, the amount that you pay for Medicare is really going to be based on your adjusted gross income that you reported to the IRS two years prior; since we’re in 2023, it’s going to be based off of your 2021 tax return,” Bennett explains. “IRMAA (income-related monthly adjustment amount) is the actual payment that is going to be taken from your Social Security.” 

Bennett cautions that if you’re still working and have additional income, your Medicare IRMAA can go from $170.10 to $587.30, based upon your tax bracket. 

“When you begin creating an income stream from your assets in the distribution phase of your retirement, and you’re starting to take money from your investments, having an after-tax account and a pre-tax account are very important. You want to have the option of where to take your money from, and how it is taxed, so that it doesn’t push you into another tax bracket, causing an avalanche of additional increases that you weren’t expecting,” says Bennett. “I’m here to guide you through those important financial decisions.” 


Securities offered through Registered Representatives of Cambridge Investment Research, Inc., a broker dealer, member FINRA/SIPC. Advisory, Insurance, and Tax Services offered through Bay Financial Planning and Tax Services, DBA Intercoastal Wealth Planning LLC, a Registered Investment Adviser. Cambridge and Bay Financial Planning and Tax Services, LLC are not affiliated.

This sponsored content is from the November/December 2023 issue of Boca magazineFor more from this year’s 561 Faces special section, click here.

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