Waller Tax and Financial Services

Financial Fact Friday: HALFof Americans aged 55 and up will retire in poverty or near poverty. Older workers are losing their jobs at a faster rate, relative to younger people and relative to where they had been before than they were in the Great Recession. (Source: Market Watch)

BLOG POST from the desk of Fred Waller 5 Ways Women Should Prepare For Retirement Click to read the blog and claim your FREE EBOOK RETIRE HAPPY!

FACT or FICTION: Social Security only replaces about 40% of working income. FACT, for many. Social Security won't cover all of your living expenses in retirement. Assuming your expenses remain the same after you leave the workforce, that creates an income shortfall of 60%. It's important for you to quantify the size of your own income shortfall at different claiming ages. That way, you know where you stand while you still have the time to address it. (Source: Kenosha News)

Thank you to Jaci Hoosier for leaving a review! As always, Fred is knowledgeable, honest and looks out for his client’s best interests. Had to call for quarterly tax info... he went over everything, sent me my form and I’m all set. Highly recommend.

Social Security Tax Deferral May Change Your Withholding Did You Know? An Executive Order issued in August allows U.S. employers the option to defer collection of the employee's share of Social Security tax between September 1, 2020 and December 31, 2020. The employee's share of this tax makes up the majority of paycheck withholding labeled as FICA on most worker pay stubs. Importantly, the Executive Order only authorizes DELAYED collection, rather than an actual reduction ...or temporary elimination of the tax. Most employers that choose not to withhold Social Security tax during the specified four-month period will need to collect the deferred tax through extra withholding after January 1, 2021. In other words, employees of these companies will have less money withheld from their paychecks this fall (resulting in increased net pay), but their net pay may decrease for several months after January 1 due to makeup withholding. For this reason, many employers have opted to continue withholding all FICA taxes as usual. The simplest way to determine whether your employer might be deferring Social Security tax collection is to save your pay stubs from August, and compare them to your pay stubs during the fall. If you see no significant change in your FICA withholding and net pay, then your employer has most likely opted out of delayed withholding. On the other hand, a decrease in the withholding amount and increase in your net pay may indicate that Social Security tax has not been withheld. You can check with your company's payroll department to make sure. Some companies may offer employees the choice to individually opt out of deferred withholding. However, under the Executive Order, deferred withholding may be mandatory for military and federal government employees with incomes below specified limits. If your Social Security tax withholding is delayed under this program, you may wish to take steps now to prepare for a potential increase in withholding and decrease in net pay during early 2021. For example, you could set aside the extra money you receive each pay period this fall as savings. A professional tax and financial advisor can help you explore other options to ensure that you are prepared for any possible upcoming changes to your net pay.

Consider buying sufficient coverage early on.

Pitfall of only using a 401(k) for retirement... Tax advantages are among the most frequently cited benefits for 401(k)s. Contributions are pre-tax, meaning that they are deducted from paychecks and excluded from taxable income, which allows these funds to grow on a tax-deferred basis throughout a person's career. Qualifying withdrawals are taxed as ordinary income while avoiding capital gains taxation. Tax diversification can be transformative to a portfolio, we can help.

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Whole or Term Life Insurance - What’s the Bottom Line?

The U.S. Census Bureau released a survey that about 60 million American households are expecting an income loss due to COVID-19 this month. Be sure to keep earmarking some monies for retirement. Yes, you need money today or the next couple of years, but frankly, you still should look out 10, 20, 30 years into the future. Remember to keep some focus on the long-term.

How does your retirement timeline look? We can help you make this timing intentional for you. Contact us, today.