JoeTaxpayer

About The Blog

11 Responses to “About The Blog”

1. Howard Says:
   October 17th, 2007 at 1:41 pm

   Joe

   Question on your social insecurity article- Is there an age after which you can earn as much as you want and the phantom tax does not apply?

   Also do you count passive income the same as earned income when doing these calculations?

   Howard

2. JOE Says:
   October 17th, 2007 at 8:13 pm

   Thank you for visiting my site. There are two issues in your question, my web article only looked at one. If you are under ‘full retirement age’ $1 in benefits are lost for each $2 you earn above $12,960. That’s quite a hit, and someone who is working should think about whether it makes sense to draw any benefits earlier than full retirement age. Note: full retirement age changes based on the year you were born. The SS web site has a link to see your retirement age.

   For the phantom tax bubble I illustrated, I show either earned income or 401(k)/ IRA withdrawals which are taxed the same. Dividends or Capital Gains have their own curves which are unpleasant in their own right, the marginal rate appearing to be 32% on what should be 5% rate dividends. The best advice (and I may repost this so it might be more easily seen) is to go to http://www.ssa.gov which is an easy site to navigate, and to buy a copy of TurboTax, and run your own scenarios. To produce those charts, I set a fixed SS payment, changed income by $1000 increments, and charted the numbers. I offered two examples, one from experience, the other at a reader’s request. The tax software will make your exact situation clear to you.
   JOE

3. alaska592 Says:
   October 18th, 2007 at 10:07 pm

   Thanks for making the marginal tax rate clearer with graphs. Most Congressmen do not realize what curse they have bestowed on SS recipients, and never will until they are required to do their own taxes.

4. JOE Says:
   October 19th, 2007 at 1:29 am

   Your kind words are much appreciated. I’ve seen many articles that mention the taxation, but none with the graphs, so it’s great to see comments like yours.

5. Cathy Says:
   November 25th, 2007 at 11:18 am

   On your page on annuities, you say, “Looking at immediateannuities.com, I find that a 70 year old woman can receive an annual payment of $8484 for her $100,000 principal. Nearly 8.5%. One can do the math and see that at 5% fixed, a withdrawal of $8484 will draw down her savings by the time she is 88. If she lives past 90, she may wish she had gone the immediate annuity route.”

   However, it seems that the $8484 payout is “Guaranteed Income for a 5-Year Period Certain Only”. Doesn’t this mean she will only be guaranteed the payments for 5 years? It looks like the option for lifetime benefits is only $463 a month, far less than the 8% return you state she will get for life.

   I’m no expert so maybe I’m missing something?

6. JOE Says:
   November 25th, 2007 at 3:35 pm

   Cathy - I used Female, age 70, $100K investment, and state of Massachusetts. The quote was for ’single life’, i.e. no spouse and no beneficiary options. Someone buying such a policy would lose their money if they die soon after the purchase. It’s the opposite of a life insurance policy, where if you get into an accident and die the week after your policy is in force, the insurance company still has to pay.
   The web site showed other options, such as a 5yr guarantee so a beneficiary would still receive a payment if the insured passes during that period. Please write back if this is still unclear.
   JOE

7. Cathy Says:
   November 26th, 2007 at 7:56 pm

   I need to move to MA once I turn 70!!! I did GA and for that state it is so much lower. It’s amazing it varies so much from state to state. Thanks for clearing that up.

8. Chthenos Says:
   March 24th, 2008 at 10:49 pm

   Thanks for reading my blog. Your site is interesting! I’ll actually be earning income eventually, and I really know nothing serious about taxes or planning for retirement, so a resource like yours is quite helpful for me!

   (–thanks for the kind words. Joe)

9. Debbie Says:
   April 13th, 2008 at 1:41 am

   What is your opinion of using home equity to invest in a life insurance policy? My advisor is telling me that it is a great way to do arbitrage: to refinance (cash out) your home equity that normally would go unused, and invest it in an equity indexed universal life insurance policy, withdrawing the proceeds tax-free many years later. You are using tax-deductible money and investing it to receive tax-free income later on, so as to have as much spread as possible that you get to keep. Of course, it is necessary to leave the proceeds alone for many years so they will compound. It seems to make a lot of sense to me. Can you see anything wrong with this?

10. JOE Says:
    April 13th, 2008 at 9:18 am

    Debbie - it seems you read my Apr 2 post, “Borrowing to buy tax free munis”. I can’t be certain the remarks there apply directly to this situation, but it wouldn’t surprise me. Without more details about the product your advisor is trying to sell you, and the rest of your situation, I can’t reply in full.
    Keep in mind, these products are heavily commissioned, and carry very high annual expenses, up to 3%/yr if not more. I am on the record as being against VAs in general, http://www.joetaxpayer.com/annuity.html and I’d feel even more strongly about borrowing to buy such a product. If you lose your job in 3 months, do you really want the expense of the loan this guy just talked you into?
    Joe

11. Dennis Ackley Says:
    May 15th, 2008 at 11:29 am

    Hello Joe,

    Nearly 90% of 401k plan sponsors say most employees will not be adequately prepared for retirement (Deloitte/IFEBP). Shouldn’t taxpayers be asking the retirement industry to either make 401ks work now…or asking Congress to come up with something that will work? Waiting will only make the problem worse.

    See my “Open Letter to the Retirement Industry” on the front page of http://DennisAckley.com.

    All the best,
    Dennis Ackley

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