Its never too early to start thinking about retirement. Careful planning can insure you have ample funds and minimize the taxes you pay. We can help!
Retirement planning can be challenging, the tax rules are complex and the jargon is overwhelming. IRAs, Roth IRAs, SEPs, 401k, Roth 401k, SIMPLE are just some examples. We put the information below together to help you better understand your options and provide basic guidance.
But, as with many financial options, the correct choice is dependent on your personal financial situation and life goals. The plan for someone age 25 may be very different from a 60 year old. We are here to help! Call JOD CPAs at (507) 334-5516 for an appointment.
Retirement planning news
IRA for those under age 50 - $6,000
IRA for those 50 and over - $7,000
SIMPLE plan for those under age 50 - $13,500
SIMPLE plan for those 50 and over - $16,500
401(k) plan for those under age 50 - $19,500
401(k) plan for those 50 and over - $26,000
2020 and 2021 Limits
2021 Social Security
The Social Security Administration announced a 1.3 percent boost to monthly Social Security and Supplemental Security Income (SSI) benefits for 2021. The increase is based on the rise in the Consumer Price Index over the past 12 months ending in September 2020.
For those still contributing to Social Security through wages, the potential maximum income subject to Social Security tax increases 3.1 percent this year, to $142,800 (up from $137,700 in 2020).
Retirement planning basics
How to have a comfortable retirement
If you're age 35 or more and haven't made a serious effort to plan for retirement, your dreams of a comfortable and active retirement could turn into the nightmare of being old and poor.
Scare tactics, you say? Consider this: most experts say you need at least 66% of pre-retirement income to live comfortably when you retire. But an active retiree may need 70-80% of pre-retirement income to pay for added travel and health care costs.
Will your company pension and social security replace 60-80% of your salary?
Retirees and taxes
When it comes to taxes, growing older can have its advantages. But older individuals may also have additional tax-related requirements. Here's a quick overview of the tax and financial breaks available as you reach a certain age.
Is a Roth IRA right for you?
For most taxpayers, you have until April 15th of the following year to contribute into a Traditional IRA or a Roth IRA. Is an IRA an option worth considering for you? If so, which is better?
Social Security benefits
Are my Social Security benefits taxable?
Up to 85% of Social Security benefits can be taxed. Whether your benefits will be taxed depends upon your total income from both taxable and tax-exempt sources. Once your total income reaches $25,000 ($32,000 for married couples), a portion of your benefits will be subject to income tax.
This is important to know as you start receiving benefits. It may impact how much you are willing to work in a part time job and it may impact the amounts you withdraw from retirement accounts.
How much will I receive in benefits?
A good way to estimate your benefits is to use the Social Security's estimator which uses your actual Social Security earnings record.
For estimates that are not specific to a particular individual, the calculator below may helpful.
When should I start receiving benefits?
Many factors go into your decision on when to start receiving your Social Security retirement benefit. Some of these factors are whether you plan to continue working, other financial resources and obligations you have, and your anticipated health and longevity.