Why is my Social Security Being Taxed Part II
Once again today we will talk about how you can save your social security from taxation with a little preplanning. Lets say that you have a 401k that you plan on using for some type of income. You also have been putting away money over the years into various taxable accounts, such as C.D.'s money market accounts and mutual funds.
What you need to do first is put a plan together. Find out what your social security benefits are, find out how much money a month or year you need to live on. Take a portion of the taxable income from your other investments and buy an immediate annuity. Your advisor can figure out what your monthly payments would be, so you can implement that into your preplanning.
Then take a majority of the rest of your assets from your 401k and other investments and start to ladder them with annuities, I would suggest a 5 year 7 year and 10 year. By doing this you give yourself tax deferral. This means that your money will not be taxed until you withdrawal it. This also would give you access to your money at different times of your life. It also gives you liquidity to move money into better products with higher rates without locking all of your money up for a longer set period of time.
Tomorrow we will get into a couple more examples with some numbers, and I will try not to confuse anyone.
Dustin J Weaver ACS PCS AAPA
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