The Navigoe Blog

Navigoe Third Quarter Newsletter: Figuring Out How Much You Need in Retirement, 14 Smart Mid-Year Tax Moves, and More!

The Third Quarter Navigoe Newsletter is complete!

Here is a summary of some of the articles in this quarter’s newsletter:

Figuring Out How Much You Need in Retirement

Most people begin retirement planning by asking the question, “how much do I have to save for retirement?” This article suggests that you are asking the wrong question.  Instead, you should be asking how much income you will need in retirement.  You may have heard rules of thumb, like “expect to spend 80% of your working income in retirement.”  But you shouldn’t count on rules of thumb for your retirement planning.  Instead, you should take the time to calculate your expenses.  Consider these four steps to prepare for retirement:

  1. Make retirement planning a top priority.
  2. Seek the counsel of others.
  3. Create a range of estimates for what you will spend.
  4. Start sooner rather than later.

Are You Flying Below The Tax Radar?

Tax laws contain certain thresholds for triggering higher taxes.  By carefully managing your taxable income each year to stay below the thresholds, when possible, you might greatly reduce your overall tax bill.  Here are the main categories of tax rate thresholds:

  • Ordinary income tax.  The income tax is a progressive, graduated rate structure with seven tax brackets.  As your taxable income increases into the next tax bracket, each subsequent dollar of earnings is taxed at that higher rate.
  • Pease/PEP limits.  Under this rule, most itemized deductions are reduced when your income is above an annual limit.  In 2014, that amount is $254,200 for individuals and $305,050 for married couples.
  • Net investment income tax, otherwise known as the Medicare surtax.  A 3.8% surtax applies to the lesser of investment income or your Modified Adjusted Gross Income that exceeds $200,000 for individuals or $250,000 for married couples.

14 Of The Smartest Midyear Tax Moves in ’14

Most people don’t think about taxes until they receive their W-2 and 1099s around February.  But the time to think about this year’s taxes is when there is still time to make some smart moves.  This is a list of 14 smart tax moves to consider between now and the end of the year.

Count On The Portability Provision

The portability provision, included in the American Taxpayers Relief Act of 2013, simplifies the ability of a married couple to take advantage of both of their lifetime exemption amounts.  This is the amount that any individual may pass on before being subject to estate taxes.

Our newsletter is mailed to clients and others who have asked to be included in our mailing list. If you would like to be added to our mailing list, please contact our office at (310) 697-0400.

You can access this quarter’s complete newsletter here: Navigoe_3Q14