Every so often, readers write me in hopes that I can help them avoid paying taxes on their retirement savings. Surely there’s a way to circumvent the tax bill on the money in their traditional 401(k) or IRA, they argue? If I had such clever strategies up my sleeve, I’d probably be retired myself, kicking back in some tropical paradise after having made millions off my consulting work. You see, Uncle Sam doesn’t let us off that easy. There’s trillions of dollars sitting in U.S. retirement accounts, and the government isn’t going to stand by and let that revenue source go riding off into the sunset. Enter required minimum distributions, the amount that you’re required to withdraw from your tax-deferred retirement accounts, and pay taxes on, starting at age 70 ½. If you understand this requirement, and start planning for it well in advance, then it is possible to postpone or reduce your tax bill. Learn more about how in today’s edition.
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Best wishes,
Elizabeth
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Thanks to all who participated in our book talk this Tuesday with Joan Frank, author of our November book title, All the News I Need! We had a great discussion. For those not on Facebook, I will share Joan’s thoughts on aging:
What seems clearest to me about aging, and about ways we encounter just about everything that inevitably happens to us as we age, is something intangible but realer than real: SPIRIT. Resolve. Zest. Clarity of purpose and vision. Determination to seize precious remaining time. Given the inevitability of loss of various kinds---physical diminishment, tragedies, difficulties, what Zorba the Greek called "the full catastrophe"---all this should somehow make us the more passionate for staying on, seeing what happens next, and allowing that understanding to enrich and nourish us.
It’s time to choose our book for December! We’ll be switching back to non-fiction, and our theme is health care--which, as we all know, can have a big impact on our finances. We’ll vote early next week, so please send me any nominations at retirewithmoney@moneymail.com. Thank you!
RETIREMENT NEWS FROM AROUND THE WEB
The Myth of Steady Retirement Spending, and Why Reality May Cost Less
Research shows that spending actually declines through much of retirement, with increases in health care spending more than offset by decreases in other categories. THE NEW YORK TIMES
New Divorce Tax Rules Could Leave You With a Big Financial Disadvantage
If you don’t finalize your divorce by Dec. 31, you’ll be subject to big changes in alimony next year. CNBC
Money Disasters Can Derail Retirement
Build up your cushion so layoffs and health challenges won’t decimate your retirement savings. REUTERS
Why People in their 50s and 60s are Having Cataract Surgery
Elizabeth O'Brien is a senior writer at MONEY, covering retirement and health care. You can email her at elizabeth.o'brien@moneymail.com and follow her on Twitter at @elizobrien.
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