According to a recent Money Watch article… As a result of the most recent tax package from Congress and the Affordable Care Act, every retired and about-to-retire person – with any amount of money in investments – has to be looking at what they are holding, and in what type of accounts.
According to Market Watch’s Robert Powell, tax-efficient investments are now a “must” for just about all retired persons. He strongly encourages using a professional – he specifically said not a broker, but a professional – to look closely at what is where.
This could be a real eye-opener for many retired persons.
The two big categories… Capital gains in taxable accounts, and interest payers in tax-deferred accounts.
Robert Keebler of Keebler and Associates recommends Master Limited Partnerships, REITs and low- turnover index funds.
But his primary picks are blue-chip stocks, and, for the second time in as many weeks, insurance products.
And before you guys start emailing me again, asking if I’m selling annuities or life insurance… No, I’m not selling annuities.
In fact, I have never been a fan of them. They have always been way too expensive for my taste. But this is the second time in just a few weeks that I have seen very good analysts recommending life insurance and annuities for tax deferral to get around a lot of the new tax issues.
Keebler said the life insurance recommendation is for healthy people at or under age 50, who do not need income from their investments to retire. You can take out your basis tax-free, and the death benefit is tax-free.
Annuities – although he doesn’t see them being as good as life insurance – can also help you skip over high tax rate periods in the last part of your employment.
One other big issue… the 3.8% Medicare investment tax for high-income folks. It kicks in at $200,000 modified adjusted gross income, and $250,000 for couples. According to the Market Watch article, the new investment tax includes all three types of returns: interest, dividends and capital gains.
Other than deferring more investment income, nobody has come up with a solution for that one. Not yet, anyway.
That’s it. That’s your Two-Minute Retirement Solution for this week.