How much tax should I withhold from my pension? Retirement Scan
Our daily roundup of retirement news your clients may be thinking about.
How much tax should I withhold from my pension?
Seniors who are receiving pension payments should ensure that their tax withholding is enough to cover the tax liability on the income and avoid trouble with the IRS, according to this article on Motley Fool. Determining the tax bill on the pension payments can be complicated. For example, if they contributed aftertax money to plan, they won't owe taxes on a portion of their pension benefits that represents these contributions.
Here are 3 key considerations for retirees taking on part-time work
Seniors on Social Security who have yet to reach their full retirement may see a reduction in their benefits if they are earning from part-time work, according to this article on CNBC. An increase in income may also push them to a higher tax bracket and lead to extra costs for Medicare. They should also ensure that they start taking required minimum distributions from their tax-deferred retirement accounts once they turn 70 1/2 to avoid a tax penalty equivalent to 50% of the RMD amount.
Ask Larry: Will filing for Social Security on a certain day increase my benefit?
Seniors can file for Social Security benefits any time within four months before the date of effectivity, according to this article on Forbes. The benefit amount will be the same regardless of the day they file their application. They even have the option to file the application up to six months after the effectivity date without any reduction in benefits, but this would only push the release of benefits to a later date.
How this senior citizen started her own business and you can, too
For an entrepreneur who started out a business later in life, old age and experience can be advantage for her venture to succeed, according to this article on MarketWatch. "I have experience as well as enthusiasm," says the entrepreneur. "Often times when you’re older you have the experience but are burned out and don’t have the enthusiasm, but when you’re younger you have the enthusiasm and not the experience. I’ve got both."
Most millennials expect to retire at age 56
A study by TD Ameritrade has found that millennials are considering retiring when they reach the age of 56, according to this article on Fox Business. The number of millennials who are saving for retirement has increased to 70% from 62% in 2016, the study found. “One of the greatest investments young people can make in themselves is to start putting money away in their 20s. Because of the power of compounding, even with ups and downs along the way, those who start early can end up with more in the end,” says an expert with TD Ameritrade.