Will you have enough money to retire?

Retirement is supposed to be a time of relaxation and enjoyment, but many struggle to afford it. Retirees often cite poor money management, limited savings, increased living costs, and sparse support systems as reasons why they struggle.

To prevent these issues from impacting your golden years, we’ve highlighted our top saving strategies and how they can be used to protect you. 

1. Know Your Tax Obligations

Deciding to retire in Florida is one of the best decisions a person can make because the state does not charge income tax. This means that any income earned throughout the year from things like Social Security, pension payments, or retirement withdrawals, won’t incur additional fees.

But, federal tax still does apply and could actually be charged at a higher rate (of up to 85%). A higher rate is usually applied to high income earners and is something to consider before making withdrawals from taxable accounts.

For those that want to avoid a federal tax hit to their benefits, it is best to consider drawing money from a Roth account as opposed to a traditional one, or swapping money into this type of account in order to avoid a tax declaration.

2. Plan Withdrawals

To know how much you’ll be taxed on withdrawals from accounts like a traditional IRA or 401(K), check directly with the IRS through their website.

Knowing where you’ll fall within their tax bracket ranges can help you time your withdrawals in a way that prevents you from jumping into a higher tax bracket and in turn saving you money.

3. Beware of Medicare Surcharges

Many are unaware that income affects the premiums charged on Medicare. But, higher earnings usually results in higher premiums with Medicare typically applying a higher rate to Part B and Part D coverage.

But, these surcharges can be avoided by timing withdrawals and payments in a way that keeps your income below their premium threshold.

4. Apply for the Homestead Exemption

If you own a home in Florida, be sure to take advantage of the homestead exemption that can be applied to your taxes each year. This exemption can be applied to by any Florida resident that owns a property and is living in it (or their dependent) as their primary home.

This exemption works by lowering the property’s taxable value of up to $50,000 and in turn, lowering the amount that will have to be paid in property tax each year.

5. Plan With a Professional

Retirement planning can be complex, which is why it’s best to do it with a professional. A professional will be able to review all of your accounts, benefits, expenses, and goals in an effort to maximize what you have.

If you’d like help with your retirement plan, give us a call at 407-328-5001, and the team at A.P. Accounting & Tax Services would be happy to help.

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