3 tax-planning mistakes retirees too often make

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3 tax-planning mistakes retirees too often make
Relying too much on tax-loss harvesting to generate an income is a common mistake that clients should avoid after they retire, writes an expert on Kiplinger. Many retirees who reached the age of 70 1/2 should also avoid the mistake of taking a required minimum distribution from their tax-deferred accounts that is below the mandatory amount. Another common misstep among retirees is not accounting for the possible taxation of their Social Security benefits.
When retirement bucket portfolios meet multiple retirement accounts
The conventional wisdom about retirement withdrawal sequencing could be used as basis for constructing a retirement bucket portfolio, writes Morningstar's Christine Benz. For example, retirees should tap into their taxable accounts first, then move on to their tax-deferred accounts before drawing income from their Roth assets, writes the expert. However, clients are advised to keep their bucket portfolio simple and pursue flexibility according to their unique financial circumstances.

Does Medicare cover nursing homes?
Medicare covers care in a certified skill nursing facility if the patient is expected to improve, but the coverage excludes custodial care, according to this article on Motley Fool. Data from Genworth Financial show that staying in a nursing home would cost $225 on average daily, or $82,125 annually. Clients should consider long-term care insurance to cover this hefty cost.

How to avoid 10% penalty on early retirement account withdrawals to pay medical bills
Although early IRA withdrawals could mean a 10% penalty aside from a hefty income tax bill, there are options that clients can use to avoid the penalty, according to this article on MarketWatch. For example, clients who incurred medical costs this year may want to withdraw from their IRAs before Dec. 31 to get the penalty tax exception. "[T]here is a limited exception to the penalty tax for early withdrawals to pay medical expenses, but you have to get the timing right to benefit from it," states the article.

Meet a 69-year-old retiree who now saves people from avalanches in his spare time
For a retired civilian engineer for the U.S. Navy, retiring at 55 allows him to pursue his passion and work as a volunteer rescuer, according to this article from Money. “It’s something I always wanted to do,” he says. “I thought it’d be an interesting, exciting way to give back to the community and help people in distress.”

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Retirement planning Retirement withdrawals Retirement income Medicare Skilled nursing facilities