• Dave Anthony, CFP

Don't Overlook These 5 Things and Lose Retirement Income

Updated: Aug 21, 2018



Having a comprehensive, integrated and personalized retirement income plan is key for retirees and pre-retirees. Today’s retirees need to look at all available resources they may have available to them in their household balance sheet, which includes not only maximizing assets but also reducing liabilities. Many retirees overlook simple solutions to create and protect retirement income because they follow the herd instead of getting individual recommendations from a retirement planning expert. The biggest areas people miss out on are:


1. The Lifetime Benefits of Converting Monies to a Roth IRA from Taxable Accounts


The means testing of Social Security income and Medicare Part B premiums are only going to get worse for retirees. The Roth conversion analysis should not only focus on the income tax saved over the life expectancy of the household, but also the reduction in future Social Security taxes and Medicare Part B premium penalties.


Currently, there are no asset or income restrictions on converting unlimited amounts over to a Roth IRA, but that could change in the future.


2. Not Participating in a Health Savings Account


There are only five types of accounts you can withdraw money from that don’t count toward the provisional and modified adjusted gross income (MAGI) calculations your Social Security taxes and Medicare Part B premiums are based on. A health savings account (HSA) is one of the easiest to set up with no income or asset restrictions.


Pre-retirees should look at the availability of switching their health care options to include an HSA during their annual open enrollment periods. The ability to invest your health savings account amounts tax-free in a long-term investment account opens up numerous possibilities to pay for future health care expenses down the road, including long-term care premiums and Medicare Part B Premiums. (For related reading, see: What Is an HSA?)


3. Misallocation of Retirement Assets


Traditional recommendations of taking Social Security as soon as you are able and waiting to withdraw monies from IRA and 401(k) accounts until your required minimum distributions (RMDs) kick in at age 70.5 can add up to hundreds of thousands of dollars in lost income by exposing portfolios to unnecessary fees, taxes, expenses and penalties. The sequence of how you withdraw monies out of your different accounts matters.


4. Not Understanding the Benefits of a Strategic Reverse Mortgage


A strategic reverse mortgage with an increasing line of credit that is set up early on in retirement can offer unique benefits for retirees and provide a cushion of tax-free income if needed. To truly benefit, a home equity strategy should be combined with a Social Security claiming strategy, a Roth IRA conversion strategy and overall investment plan.


5. Not Taking Advantage of Available Tax Deductions


Discounted Roth IRA conversion techniques, conservation easements, charitable remainder trusts, and donor advised funds should all be analyzed and explored for retirees to see if additional tax deductions can be created to offset Roth IRA conversion taxes. Many times individuals are eligible for these types of solutions but are simply unaware they exist or have limited knowledge of how to use them properly.


Many retirees are inadvertently exposed during their years in retirement to these types of situations. Having a comprehensive, integrated, optimized retirement income plan that looks at all areas of a retiree's financial life can add up to hundreds of thousands of dollars in savings by avoiding unnecessary fees, expenses, taxes and penalties.


If you'd like our help hitting these 5 things and increasing your retirement income, contact us today.


At Anthony Capital, we offer comprehensive, integrated financial planning and wealth management services.


Our clients benefit from the combination of our mathematically-based investment management strategies and the application of time-tested financial planning principles.

Blending sound money management techniques with intelligent tax, estate, and insurance planning, creates truly unique financial planning outcomes for our clients. 



(This article by Anthony Capital's David M. Anthony, CFP®, RMA was featured on Yahoo! Finance)