The Cash Flow Clock: For Retirees - Book - Page 91
The Cash Flow Clock
our income in retirement and our expenses. It is
critical to having an accurate Cash Flow Clock.
One of the unfortunate aspects of Social Security is
that it can be taxed. This is utterly ridiculous. We
have paid into Social Security for decades. We just
want to get our money back. But the government has
chosen to tax us on it.
Not everyone is taxed on Social Security benefits. If
we don’t have any other taxable income (wages,
pensions, rental income, business income, dividends,
IRA withdrawals, etc.), then the government assumes
we can’t afford to pay tax and Social Security is tax
free.
If we have any taxable income that exceeds $34,000
for single and $44,000 for married filing joint (not
very much), then up to 85% of our Social Security
benefits can be taxed.
One way to reduce, or even eliminate taxation on
Social Security is to reduce the income that we pull
from tax deferred assets. If all of our income comes
from Roth accounts, then we will likely not have to
pay tax on our benefits.
Every situation is different. As we consider the
possibility of doing Roth conversions, we must
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