A Shock To Your Retirement

Watching the Magnificent Seven in 2023 has been a lot more fun than analyzing my tax return under a microscope. If it has been for you too, when April 15 rolls around, you might be in for a shock, writes Brian O’Connor in last weekend’s New York Times article “A Shock for Many Retirees: Social Security Benefits Can be Taxed.”

After reading this, I can see why investors direct their attention to stocks. Tax law, especially as it pertains to Social Security, is painfully confusing.

That doesn’t mean taxes should be ignored. Managing your income stream in retirement, including Social Security, any pensions, and especially your required minimum distributions (RMD), is essential for both the sustainability of your portfolio as well as its returns.

Maybe it is time to focus your attention away from the Magnificent Seven and start paying attention to your effective marginal tax rate (EMR).  

Wade Phau, PhD and author of the Retirement Planning Guidebook identifies potential annual tax savings of over .4% for investors who efficiently manage their EMR.

Is it time to manage yours?

Stay tuned – next week we will explore the upside and downside of the Magnificent Seven.

Till then, happy holidays to you and your loved ones.