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Tom Meaglia, ChFC®, AEP®,

CLU®, CRPC®, MSFS

Chartered Financial Consultant

Investment Advisor Representative

Chartered Retirement Planning Counselor

CA Insurance Lic. #0567507

 

Meaglia Financial Consulting

2105 Foothill Blvd., #B140, La Verne, CA 91750

 

Toll Free: 800-386-3700

Bus:         909-593-6105

Cell:         818-681-8600

Fax:         909-593-6120

 

Email: tom@meagliafinancialconsulting.com

Website: www.meagliafinancialconsulting.com

July/August 2022

Consider Taxes When Planning for Retirement

Retirement / pension income tax and social security benefit concept : Older american couple stands near a tax button on a calculator, depicts a single largest expense in retirement e.g pension tax

When it comes to planning for retirement, there’s a lot to think about. How should you save for it? Where will the money come from? How much will you need for a comfortable lifestyle? But one important element that people often overlook is planning for taxes. Failing to take taxes into account can be an expensive mistake.


Your Tax Bracket
You may think you’ll be in a lower tax bracket once you’re retired, but that won’t necessarily be true. While you may no longer be earning a steady income from your job, your tax bracket may stay the same. Keep in mind that you may not have some tax deductions in the future that you may have now. These could include deductions for dependent children and retirement plan contributions, as well as the mortgage interest deduction once you’ve paid off your home.


Your Social Security Benefits
If you have income in retirement, up to 85% of your Social Security benefit may be taxable by the federal—and sometimes state—government. Other income might come from investments, retirement plan distributions, or a job.


Your Retirement Savings
Remember how the contributions to your company’s qualified retirement plan reduced your taxable income while you were working? Once you retire, it’s time to pay up. Withdrawals from 401(k) plans, traditional IRAs, and annuities are taxable as ordinary income.

A Tax Break from TIPS
Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation and offer tax benefits. TIPS’ principal increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you’re paid the adjusted principal or the original principal, whichever is greater. Interest income and principal growth are exempt from state and local income taxes.

Tax Planning with a Roth IRA
Opening a Roth IRA can provide you with tax-free income when you retire. Although contributions to a Roth IRA are made with after-tax dollars, withdrawals of earnings generally are tax free after age 59½, if the account has been open for five years. Consult your financial professional, who understands the requirements regarding these investments.


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Thomas Meaglia is an Investment Adviser Representative of Coppell Advisory Solutions LLC, dba, Fusion Capital Management, a registered investment adviser that only conducts business in jurisdictions where it is properly registered, or is excluded or exempted from registration requirements. Registration as an investment adviser is not an endorsement of the firm by securities regulators and does not mean the adviser has achieved a specific level of skill or ability. The firm is not engaged in the practice of law or accounting.
Insurance and annuity products are not sold through Fusion Capital Management. Fusion does not endorse any annuity or insurance product, nor does it guarantee any insurance or annuity performance. Annuity and life insurance guarantees are subject to the claims-paying ability of the issuing insurance company. If you withdraw money from or surrender your contract within a certain time after investing, the insurance company may assess a surrender charge. Withdrawals may be subject to tax penalties and income taxes. Persons selling annuities and other insurance products receive compensation for these transactions. These commissions are separate and distinct from Fusion's investment advisory fees.
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