BOOM RETIREMENT SOLUTIONS
Strategies for Boosting Retirement Income
Top Retirement Cash Flow Risks
Why you need this Retirement Toolkit
Will outlive your retirement savings?
Will taxes and inflation erode your Retirement Nest Egg?
Will you head into retirement using an Accumulation Strategy or a Decumulation Strategy?
Will you maintain your lifestyle in a market downturn?
Are you prepared for RMD's and IRMAA?
BOOM RETIREMENT PLANNING
Strategies for Boosting Retirement Income
If You Ask 50 Financial Advisors,
"What is the best way to retire?".
You will get 50 different answers!
That is because despite all their training and certifications,
financial advisors each bring their own perspectives, experiences, and
biases to the table, leading to varied approaches and strategies tailored to their
unique understanding of the market, client needs, and risk tolerance.
Economic Science and Math proves...
There is Only One Optimal Way to Retire
Over 6 Decades of Research Created the 7 Steps Below.
Develop a Plan: Assess your financial situation, retirement goals, income sources and monthly budget for expenses.
Secure Lifetime Income: Consider products like private pensions for guaranteed income.
Maximize Social Security: Optimize benefits by understanding your options; delaying to 67 or 70 can help.
Diversify Investments: Build a balanced portfolio—30% cash value life insurance, 30% lifetime income, 40% growth assets.
Prepare for Health Care Costs: Budget for health expenses, including long-term care, which most seniors will need.
Use Tax-Efficient Strategies: Consider Roth conversions to reduce retirement taxes.
Stay Active and Engaged: Pursue activities for mental, physical, and emotional well-being in retirement.
Our Blog
Unlock Your Financial Future: The Power of Roth IRA Conversions
Unlock Your Financial Future: The Power of Roth IRA Conversions
Are you ready to take control of your retirement and maximize your tax benefits? Discover the game-changing strategy of Roth IRA conversions and transform your financial future today.
What is a Roth IRA Conversion?
A Roth IRA conversion allows you to transfer funds from a traditional IRA or other eligible retirement accounts into a Roth IRA. Unlike traditional IRAs, Roth IRAs offer tax-free growth and tax-free withdrawals in retirement, providing you with unparalleled financial flexibility.
Why Consider a Roth IRA Conversion?
Tax-Free Growth and Withdrawals: One of the most compelling benefits of a Roth IRA is the tax-free growth. Once your funds are in a Roth IRA, they grow tax-free, and withdrawals in retirement are also tax-free. This can lead to significant tax savings, especially if you expect to be in a higher tax bracket in retirement.
No Required Minimum Distributions (RMDs): Traditional IRAs require you to start taking distributions at age 72, which can increase your taxable income. Roth IRAs do not have RMDs, allowing your investments to grow even longer without being forced to withdraw funds.
Estate Planning Advantages: Roth IRAs can be a powerful tool in estate planning. Your heirs can inherit your Roth IRA and continue to enjoy tax-free growth, providing a lasting financial legacy.
Diversify Your Tax Strategy: By converting to a Roth IRA, you diversify your tax strategy. You’ll have a mix of taxable, tax-deferred, and tax-free accounts, giving you more options to manage your tax liability in retirement.
How Does a Roth IRA Conversion Work?
Converting to a Roth IRA involves paying taxes on the amount you convert in the year of the conversion. While this may seem daunting, the long-term tax benefits can far outweigh the initial tax hit. Here’s a simple step-by-step process:
Evaluate Your Current Tax Situation: Assess your current tax bracket and determine how much you can afford to convert without pushing yourself into a higher tax bracket.
Plan Your Conversion Strategy: Consider converting portions of your traditional IRA over several years to manage your tax liability more effectively.
Consult a Financial Advisor: Work with a financial advisor to develop a conversion strategy tailored to your unique financial situation and goals.
Execute the Conversion: Initiate the conversion through your financial institution, ensuring all necessary paperwork is completed accurately.
Real-Life Example: A Success Story
Meet Jane, a 45-year-old professional planning for retirement. After consulting with her financial advisor, Jane decided to convert $50,000 from her traditional IRA to a Roth IRA over five years. By spreading out the conversion, she managed her tax liability and took advantage of market growth. Now, at 60, Jane enjoys tax-free withdrawals, giving her peace of mind and financial security.
Take the Next Step Towards Financial Freedom
Roth IRA conversions can be a powerful tool to enhance your retirement strategy and provide significant tax benefits. Don’t wait to secure your financial future. Contact us today to learn more about how a Roth IRA conversion can benefit you and to develop a personalized conversion plan tailored to your needs.
Unlock the power of tax-free growth and retirement flexibility. Your future self will thank you.
For more detailed information and personalized advice, call (888) 839-1611 to speak with one of our experienced Retirement Specialists
Taxation can play a substantial role in determining
the overall value of your retirement portfolio
How are your current retirement income sources taxed?
Social Security
Qualified Accounts
Non-Qualified Accounts
Social Security is a federal government program in the United States that provides financial benefits to eligible individuals, primarily retirees, disabled individuals, and their families. It is funded through payroll taxes collected under the Federal Insurance Contributions Act (FICA) and the Self-Employment Contributions Act (SECA).
Key components of Social Security include:
Retirement Benefits: These benefits are available to workers who have paid into the Social Security system through payroll taxes during their working years. Individuals can start receiving reduced retirement benefits as early as age 62, but full benefits are available at the full retirement age, which varies depending on the year of birth. Delaying benefits beyond full retirement age can increase the monthly benefit amount.
Disability Benefits: Social Security Disability Insurance (SSDI) provides benefits to individuals who are unable to work due to a qualifying disability. To be eligible, individuals must have a sufficient work history and meet specific medical criteria.
Survivor Benefits: These benefits are paid to the surviving spouses, children, or dependents of deceased workers who paid into the Social Security system. The amount of the benefit depends on the deceased worker's earnings record.
Supplemental Security Income (SSI): Although administered by the Social Security Administration, SSI is a separate program funded by general tax revenues (not Social Security taxes). It provides financial assistance to elderly, blind, or disabled individuals with limited income and resources.
Social Security is a critical component of retirement planning for many Americans, providing a safety net to ensure a basic level of income in retirement, during periods of disability, or after the death of a family member.
Social Security benefits may be taxed based on your combined income, which includes adjusted gross income, nontaxable interest, and half of your Social Security benefits. Depending on your income level, up to 85% of your benefits could be subject to federal income tax.
A qualified account is a type of retirement savings account that offers tax advantages, typically regulated by the IRS under specific sections of the tax code. Contributions to qualified accounts are often tax-deferred, meaning that contributions are made with pre-tax dollars, reducing the individual's taxable income in the year of the contribution. Taxes on contributions and investment earnings are deferred until withdrawals are made, usually in retirement.
401(k) plans
403(b) plans
457 plans
Traditional IRAs
SEP IRAs
SIMPLE IRAs
Self Directed IRAs
Pensions
Annuities
Withdrawals from these accounts are generally subject to income tax, and there may be penalties for early withdrawals before a certain age (usually 59½). Additionally, qualified accounts are subject to Required Minimum Distributions (RMDs) once the account holder reaches age 73 (if born before 1960).
Required Minimum Distributions (RMDs) are the minimum amounts that retirees must withdraw annually from their tax-deferred retirement accounts, such as traditional IRAs and 401(k)s, starting at age 73 (as of 2023). The amount of the RMD is calculated based on the account balance and the account holder's life expectancy. Failing to take RMDs can result in significant tax penalties, including a hefty excise tax on the amount that should have been withdrawn.
A non-qualified account is a type of investment account that does not have the same tax advantages or restrictions as qualified retirement accounts. Unlike qualified accounts, contributions to non-qualified accounts are made with after-tax dollars, meaning there's no tax deduction for contributions.
Examples of non-qualified accounts include:
Brokerage accounts
Mutual fund accounts
Certificates of deposit
Savings accounts
Roth IRA
Cash Value Life Insurance
Annuities
These accounts are often used for general savings and investments outside of retirement, offering more flexibility in terms of contributions and withdrawals, but without the tax advantages of qualified accounts.
The exception is the Roth IRA in which the principal, interest, earnings and dividends are all tax-free. Roth IRAs are also not subject to RMD's.
A Roth conversion is the process of transferring funds from a Qualified retirement accounts into a Roth IRA (Non-Qualified Account). The converted amount is subject to income tax in the year of the conversion, but future withdrawals from the Roth IRA are tax-free, provided certain conditions are met. This strategy is often used to reduce taxable income in retirement and to avoid required minimum distributions (RMDs).
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©Copyright 2023| Boom Insurance Agency. All Right Reserved
Boom Retirement Planning is a brand under Boom Insurance Agency LLC
©Copyright 2024| Boom Insurance Agency. All Right Reserved