Are you talking to your
clients about tax planning for retirement? Go
to discuss tax planning
Taxes will require more consideration in future years for retirees. Shouldn’t you ask them about it? Taxes can be
the start of so many wonderful conversations
with prospects and clients about something
they hate to pay.
Our government desperately needs more
Social Security: Currently, 9,100 baby
boomers retire daily. Our biggest birth year
was 1957, followed closely by 1958 to 1964.
We will have 11,400 baby boomers retiring
every day between 2022 and 2029. Seventy
percent of baby boomers will retire between
2022 and 2029. We cannot afford the ones
who are retiring now. Where will the government get enough revenue to cover all who
retire between 2022 and 2029?
Medicare, Medicaid and the Patient
Protection and Affordable Care Act:
Aren’t these costs intertwined? Are their
costs increasing or decreasing?
Homeland Security: Would you like to
wait in even longer lines to fly? Are the
costs associated with this increasing or
Defense: Aren’t there more skirmishes
everywhere? Skirmishes cost money.
Infrastructure: How would you like to
drink Flint, Michigan, water? Should we
repair Pittsburgh’s bridges? What is it like to
drive in major cities like Atlanta, Chicago or
Los Angeles? How are they going to fix this?
National Debt: The Congressional Budget
Office forecasts the U.S. will be $57 trillion
in debt by 2034. By 2019, our tax revenue
will only pay for entitlements, interest
on the debt and defense. By 2023, only
entitlements and interest on the debt are
covered. The CBO details that we already
pay more in taxes than for food, clothing and shelter combined. It will be much
worse in the future.
Tax planning is vital to the success of future
retirees. Agents and financial professionals
must have a basic understanding of income
taxes to provide beneficial advice for current
and future retirees.
Here is the easiest and quickest way to
learn about taxes. Go to www.irs.gov and click
on forms and publications. Print out all 105
pages of the form 1040 instructions. Read
them several times. Pay close attention to the
30: The Social Security Worksheet
39: The Personal Exemption Worksheet
40: Standard Deduction Chart for over 65
101: Income and Outlays
102: Tax Rate Schedules
Learn that a couple over age 65, filing a
joint return and not itemizing, has a standard
deduction of $15,500 for tax year 2016. Addi-
tionally, each gets a $4,050 personal exemp-
tion. That couple can have $23,600 of fully
taxable income and not pay any income tax.
If they are only taking a $10,000 RMD in
addition to their Social Security, they could
withdraw an additional $13,000 from their
IRA and not pay income taxes. Over a 20 year
period that would eliminate taxes on $13,000
x 20 or $260,000!
This remains effective in the 10 and 15
percent tax brackets because tax laws are
I made my own rule for this age group that
I call Rule of 99-15. It reminds me that people
over 65 can have $99,000 of taxable income
and be in the 15 percent tax bracket. That
means they pay zero percent capital gains.
Couldn’t we use this as a reason to harvest
capital gains for prospects and clients before
they lose it to taxes?
Ask prospects and clients if they love someone at the Internal Revenue Service enough
to leave them a lot of money. I bet the answer
will be no. Then help them make sure they
have strategies in place to prevent that. RA
Tax planning is vital for retiree