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Before choosing an annuity, know the tax implications: Retirement Scan

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Before choosing an annuity, know the tax implications
Clients who consider annuitizing are advised to know the tax consequences of their decision, according to this article on CNNMoney. Annuities can be qualified or non-qualified and are subject to different tax treatments. There are also estate tax consequences as well as tax penalties to consider, so consulting a tax adviser is necessary. "It is also important to discuss the overall financial and investment implications of the annuity with someone other than the person selling the annuity," says an expert.

One-third of Americans have this little in retirement savings
Data from Northwestern Mutual show that one-third of Americans have saved less than $5,000 for retirement, with 21% of people not saving at all for the golden years, according to this article on Motley Fool. It is a mistake to rely completely on Social Security, as it could only replace 40% of their pre-retirement income. Clients should put retirement saving ahead of other priorities to secure their golden years.

This map shows how long $1 million in retirement savings will last in every state
An analysis by HowMuch.net found that a $1 million retirement savings could last the longest in Mississippi, Arkansas, Tennessee and Oklahoma, according to this article on Money. The analysis also found that the same amount of savings will last the shortest in Washington, D.C., and Hawaii. “It is not surprising that Hawaii ranks as one of the worst states in affordability. By every measure, it is incredibly expensive to live the island life on a fixed income,” says an expert with HowMuch.net.

What the new tax law means for your charitable giving
From a tax perspective fewer people are likely to donate to charity under the new law as the standard deduction has increased considerably, making the itemized deduction less valuable, according to this article on CNBC. Those who want to benefit from charitable deductions should consider "bunching" or using donor-advised fund. Donating directly from their IRA through qualified charitable distributions is another tax-efficient option for retirees aged 70 1/2 who have to take mandatory distributions from the retirement account.

Ask Larry: Will the new law block my spousal benefit?
A senior born before January 1, 1954 is allowed to file a restricted application for Social Security spousal benefits at full retirement age and delay her own retirement benefit until 70, according to this article on Forbes. Her spousal benefit will be stopped once she file for her own retirement benefit at 70 if the spousal benefit is the lower amount.

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