5 tax tips for those thinking about or getting ready for retirement.I have typed up an excerpt of the article from WSJ:5 tax tips for those thinking about or getting ready for retirement.
1. Don’t forget about taxes when you look at the size of that retirement nest egg.
2. Diversify your retirement asset by adding Roth IRA, even if you are close to retirement.
3. Remember, you must pay estimated taxes in retirement.
4. Even if you wait until 66, it may not pay to take Social Security the first year of eligibility. If you worked for part of the year, those earning may push you over the limits and result in taxes on your Social Security, says Ted Sarenski, CEO of Blue Ocean Strategic Capital in Syracuse NY.
“My birthday is Sept. 5,” he says. “In the year I turn 66, I already have nine months of income. If I have earned $50,000, I am $10,00 over the $40,000 limit.
I have to give back $1 for every $3 over that. It may not pay for me to take Social Security (in the first year).”
5. Don’t put retirement planning on autopilot.
I have the following 2 questions:
To #3: Does VG withhold taxes from retirement plan withdrawals?
To #4: Why does Ted Sarenski have to “give back $1 for every $3 earned over $40,000”?