Retirement medical expenses are getting more and more attention from retirees. The increase in healthcare costs and the consequent inflation factors are increasing the demand for advanced programs related to preparing these costs. At present, the inflation rate of Medicare B is about 8%, while the D is about 7%.
Health care and medical insurance costs are one of the biggest costs - even more than entertainment and housing costs. Consumers are often confused when it comes to the appropriate amount of "medical expenses" for family budgets. Many people are unaware that an individual's health insurance premium will be affected by a person's annual income. Understanding a person's MAGI [correcting adjusted gross income] and implementing strategies around certain income thresholds can have a positive impact on post-retirement health care costs.
This is an example - married couples lowering the tax rate by one threshold can save $70,000 in their lifetime. Planning how to achieve this goal?
Non-qualified annuities, health savings accounts, permanent life insurance, reverse mortgages, and ROTH IRA are all ways to reduce taxable income. When the IRA owners are forced to start withdrawing money from their IRA when they are 70 years old, the required minimum allocation [RMD] will appear. Use strategies to reduce IRA balances in pre-retirement periods - such as ROTH conversions, early withdrawals, and QLAC [Qualified Longevity Annuity Contracts] are ways to reduce the amount of funds that must be obtained from the IRA under the RMD rules - and then reduce taxable income.
The annuity in the payment phase uses a tax base called the "exclusion rate" – this simply means that the payment received by someone is considered part of the "return on investment" and "taxable interest". An annuity can take a one-time deposit and create a guaranteed lifetime income, which may bring reliable benefits from a tax planning perspective. In terms of permanent life insurance - the cash value in a life insurance contract can usually be obtained tax-free by providing a policy loan. Finally - funds created by reverse mortgages are not subject to state and federal income taxes.
Health savings accounts are becoming a noteworthy tax planning tool. They have a "triple tax benefit" and, if implemented early, can create a pool of tax-free funds that can be used to fund future medical expenses.
Finally - tax planning is closely related to investment plans. Combining taxes and investment plans can create real savings for the retirement year. Retirement is mainly about income rather than growth. Control spending - taxes and health care are at the forefront and center - more money can be spent on the pockets of retirees to help them enjoy retirement age.
Orignal From: Save on post-retirement health care costs
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