Many retirees assume they’ll be in a lower tax bracket later in life and that their tax returns will get simpler. But often that’s not the case. This 5 Questions with Fidelity explains how different types of income are taxed in retirement. We also discuss how to estimate your tax rate, manage your tax brackets, and take advantage of tax-smart planning strategies. 00:00 Welcome to 5 Questions with Fidelity 00:17 Is Social Security taxable? 01:48 How are other types of retirement income taxed? 02:29 How is in ...

Core Insights - The article discusses the financial challenges faced by older Americans, particularly focusing on the case of a 75-year-old man named Enzo who has limited retirement savings and is still working full-time [5][19] - It highlights the importance of Social Security benefits and potential strategies for improving retirement security, including working longer and optimizing savings [2][8] Group 1: Current Financial Situation - As of 2024, nearly 19% of Americans aged 65 and over are still working, which can help mitigate savings shortfalls [2] - The median retirement savings for Americans aged 65 to 74 is $200,000, while those aged 75 and over typically have around $130,000 [3] - Enzo has only $31,000 in savings despite earning $65,000 annually, indicating a significant gap in retirement preparedness [5][19] Group 2: Social Security Benefits - Enzo is eligible for Social Security benefits, which could amount to approximately $2,360 per month based on his earnings history [6] - If he has not claimed benefits yet, he may be entitled to retroactive payments for up to six months [7] - Combining his salary with Social Security could help cover expenses and allow his savings to grow [7] Group 3: Investment and Savings Strategies - It is recommended to save in tax-advantaged accounts like Roth IRAs, which do not have required minimum distributions [9] - Experts suggest maintaining a conservative investment strategy, focusing on stable assets like bonds, especially for those past retirement age [10] - Estimating annual expenses and planning for a sustainable withdrawal rate from savings is crucial for long-term financial health [11] Group 4: Housing and Living Arrangements - Home equity can be a valuable resource for older adults, and options like reverse mortgages or cash-out refinancing may be considered [13][15] - Downsizing or moving into multi-generational living arrangements can alleviate financial burdens and provide emotional support [18][19] - Selling a home can yield profits exempt from capital gains taxes up to $250,000, which can be reinvested into retirement savings [17]

Core Insights - Roth IRA accounts allow tax-free withdrawals in retirement, providing a significant advantage for retirees [1] - Strategies to minimize tax burdens and maximize savings are crucial for those with lower expected retirement incomes, especially with upcoming tax breaks for seniors [2] - The average annual spending for Americans aged 65 to 74 exceeds typical retirement income levels, highlighting potential shortfalls for retirees [3] Investment Strategies - Utilizing the 4% withdrawal rule on a $550,000 nest egg results in an annual income of approximately $22,000, which may be insufficient compared to average retirement spending [4] - The average American aged 65 to 74 has about $609,000 saved, indicating that $550,000 may not be adequate for a comfortable retirement [5] Tax-Advantaged Accounts - Self-directed IRAs, such as those offered by SoFi, provide commission-free investing and broader investment options compared to employer-sponsored accounts [6] - High-net-worth individuals may consider the backdoor Roth IRA strategy to bypass income limits on contributions [7][8] Social Security Benefits - Delaying Social Security claims until age 70 can result in an 8% annual increase in benefits, significantly enhancing retirement income [11] - Larger Social Security benefits can alleviate pressure on retirement savings, allowing for longer investment growth [12] Cost Management in Retirement - Downsizing homes can free up equity and reduce monthly expenses, which is beneficial for retirees looking to stretch their savings [17][18] - Moving to states with no income tax can also lower overall living costs, providing additional financial relief [14][15]

All right, Leader Jeff, let's turn now to Tuesday's election results. Democrats had a clean sweep uh winning the New York City mayoral election. Both gubernatorial races in New Jersey and Virginia, as you know, ballot measure in California.You are on track to potentially become the next speaker if Democrats were to win back the House in 2026. How confident are you that that's going to happen. Well, Democrats are definitely going to take back control of the House of Representatives, and we're going to stay f ...

Even with a 2.8% COLA for 2026, many Americans are nonetheless worried about how Social Security will help pay for their rising expenses in retirement. https://t.co/DjCB7LQTzk ...

Core Points - The earliest age to claim Social Security retirement benefits is 62, which results in a permanent reduction of benefits by 30% for those born after 1960 [2] - Claiming Social Security early while working can lead to significant deductions from benefits if earnings exceed specified limits [3] Group 1 - Claiming Social Security at age 62 results in a reduction of benefits; for example, a primary insurance amount of $1,000 would reduce to $700 at age 62 [2] - The Social Security Administration imposes earnings limits for beneficiaries under Full Retirement Age (FRA); in 2025, the limit is $23,400, with a deduction of $1 for every $2 earned above this limit [3] - If a beneficiary turns FRA in the same year, the deduction is $1 for every $3 earned above an annual limit of $62,160 [3] Group 2 - Benefits are recalculated at FRA to account for deductions, resulting in a lower monthly benefit until FRA is reached [4] - Early claimants face a dual impact: reduced monthly benefits and a potential cut in future benefits [4]

Group 1 - The National Institute on Retirement Security reported that 79% of Americans feel there is a broad retirement crisis, with 55% worried about achieving financial security post-career [1] - A significant reason for the bleak outlook on retirement is the lack of savings, exacerbated by ongoing inflation affecting workers' ability to set aside money in retirement accounts [2][3] - Social Security is projected to replace about 40% of pre-retirement earnings for average wage earners, but most retirees require about twice that amount to maintain their standard of living, highlighting the importance of personal savings [3] Group 2 - Vanguard's 2024 data indicates that the average 401(k) balance among savers of all ages is $148,153, while the median balance is significantly lower at $38,176, suggesting a disparity in savings [5][8] - The median balance of $38,176 is considered a more representative figure of what Americans have saved for retirement, as the average is skewed by higher earners with large 401(k) balances [6][8] - The typical American has less than $40,000 saved for retirement in a 401(k), emphasizing the need for strategic spending and maximizing retirement contributions [7]

Core Insights - The Social Security cost-of-living adjustment (COLA) for 2026 is set at 2.8%, translating to an average increase of $56 per month, but this modest increase may not alleviate deeper concerns regarding the program's sustainability and purchasing power [2][4]. Group 1: Concerns Among Retirees - Many retirees express that the annual COLAs do not keep pace with their actual living costs, particularly in areas like healthcare and housing, leading to a sentiment that the 2.8% increase is insufficient [5]. - A significant portion of middle-class Americans, particularly those in their 50s and 60s, fear that Social Security benefits may be reduced or cease to exist, with 39% expressing this concern despite the COLA [3][4]. Group 2: Retirement Planning Strategies - Experts recommend stress-testing retirement plans to assess the impact of potential reductions in Social Security benefits, emphasizing the importance of having a written retirement plan [6]. - Delaying Social Security claims can increase permanent benefits, which may help mitigate future financial uncertainties related to policy changes or inflation [6]. - Building non-Social Security income through maximizing retirement account contributions and diversifying income streams is advised to enhance financial resilience in retirement [6].

Core Insights - Grant Cardone challenges the traditional view of retirement, urging baby boomers to adopt a proactive attitude towards work and learning rather than slowing down [1][2] - He emphasizes the importance of acquiring new skills relevant to today's digital economy, including AI, crypto, and social media, to remain financially and socially engaged [2][3] - Cardone highlights the increasing life expectancy and the potential for a long retirement, suggesting that many are unprepared for the implications of living longer [3][5] Financial Implications - The looming depletion of the Social Security trust fund by 2033 is a significant concern, prompting a need for individuals to rethink their retirement strategies [5] - Cardone advocates for continued work in innovative ways, such as freelancing or consulting, to adapt to changing economic conditions and maintain engagement [6]

Core Insights - Retirement can be financially secure, but common mistakes may jeopardize boomers' savings [1][3] Group 1: Common Cash Flow Mistakes - Underestimating inflation and over-relying on Social Security can deplete savings faster than anticipated [3] - Not timing IRA tax withdrawals can lead to increased tax liabilities as retirees age [4][5] - Failing to develop a tax strategy before retirement can result in costly long-term consequences [6] Group 2: Tax Strategies - Retirees should consider withdrawing from IRAs in low tax years to minimize tax liabilities [4][5] - Delaying required minimum distributions (RMDs) can push retirees into higher tax brackets later [6] - Keeping taxable income too low early in retirement may prevent advantageous Roth IRA conversions [6]