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How changes in income affect Medicare premiums

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How changes in income affect Medicare premiums
An increase in income could mean an increase in Medicare premiums for seniors, according to this article on Kiplinger. Medicare will charge a high-income surcharge if seniors reported more than $85,000 (for singles) or $170,000 (for joint filers) in modified adjusted gross and tax-exempt interest income on their most recent tax returns. As a result, Medicare Part-B monthly premiums could climb as high as $460.50, while Part-D premiums could increase $12.40 to $77.40 per month.

Why the tax law may induce some people to put more money in 401(k)s
The cap on the state and local tax deduction under the tax reform law may prompt more Americans to direct their retirement savings to their 401(k)s than to build home equity, according to this article in The Wall Street Journal. "If people were equally likely to use their home equity and retirement accounts in retirement, it wouldn’t really matter whether they saved for retirement through their house or through their 401(k) or IRA," writes Alicia Munnell, director of Boston College Center for Retirement Research. "But the evidence shows that retirees are extremely reluctant to tap their home equity. Hence, to ensure that people have the resources they need, it’s better to save through a retirement plan."

Consider an ESOP as your first, not last, resort
Retirement savers should not allow misconceptions from preventing them from viewing an employee stock option plan as a first resort solution to retirement saving, writes a Forbes contributor. "I’ve found that an ESOP should absolutely be one of the alternatives weighed by business owners for two powerful reasons: ESOPs offer potentially compelling benefits at the time of sale. And, because they increase employee engagement, ESOPs can help improve a company’s performance," explains the expert.

How life expectancy affects retirement planning
Building a retirement plan around extreme longevity dates could pose risks and challenges for the average saver, according to this article on Morningstar. That's because it will force people to save more money than they should, reduce their spending to unreasonable levels and even work longer than they need to. An expert says another strategy to address longevity risk is to create guaranteed income sources that can match nondiscretionary expenses and use a more flexible approach to retirement planning.

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