Working in retirement: financial considerations

For retirees who want to go back to work, there are some important financial considerations to keep in mind. An advisor can help you think through the implications for you. Consider these factors: Social Security benefits: If you return to work, it’s possible that your additional income could bring you over the annual earnings limit for Social Security. That means you could temporarily lose all or part of your benefits before you reach full retirement age. After you hit full retirement age, you can work without affecting your benefits. For someone who isn’t receiving Social Security yet, returning to work…..

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IRS makes change to crypto reporting

In the latest draft of IRS Form 1040, the agency has made a slight but essential change to the wording of the question related to virtual currency. On the 2019 and 2020 tax returns, the following question appeared: “At any time during 2020, did you receive, sell, send, exchange, or otherwise acquire any financial interest in any virtual currency?” The question led many people to wonder whether the IRS was trying to create a database of cryptocurrency investors, even if they had not sold their interests. It was also so broad that taxpayers and advisors found it tough to answer……

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Planning for high-net-worth families with possible tax law changes

If certain proposed changes to federal tax law pass, they could have a big effect on high-net-worth individuals and families. While it is unclear exactly what changes will go through, now is the time for people who might be affected to plan ahead. Currently, individuals can give up to $11.7 million in assets during life or at death without paying gift or estate taxes. Couples can give up to $23.4 million without paying these taxes. These exemption levels are the highest they have ever been. They are scheduled to sunset on Dec. 31, 2025, reverting to pre-2018 levels in 2026. The…..

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What to look for when buying an annuity

An annuity can be a useful tool for long-term care planning, but it is a complex financial product that can be hard to understand. If you are purchasing an annuity, you need to consider your options carefully. An annuity is a contract with an insurance company under which the consumer pays the company a certain amount of money and the company sends the consumer a monthly check for the rest of his or her life, or for a certain term. Annuities come in many flavors. They can be deferred (begin paying out at a later date) or immediate (begin paying…..

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Transferring Medicare and Medicaid plans when you move

If you plan to move, can you take your Medicare or Medicaid plans with you? The answer depends on whether you have original Medicare, Medicare Advantage or Medicaid. Medicare If you have original Medicare (Plans A and B), you can move anywhere in the country and still be covered. Medicare is run by the federal government, so it doesn’t matter what state you are in as long as your provider accepts Medicare. Your supplemental (Medigap) plan should also continue to cover you in your new home state, but your premiums may change. The exception is if you move to Massachusetts,…..

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Will electronic wills go viral?

More and more transactions are being done digitally, but estate planning has lagged behind technology. That may be changing, however. Even before the pandemic made social distancing necessary, electronic wills were gaining legitimacy. An electronic will (or “e-will”) is a will that is created completely electronically, without paper and ink, using digital signatures. The Uniform Law Commission (an organization that provides states with model legislation they can adopt) recently approved the Electronic Wills Act, which provides a framework for a valid electronic will. Under the act, states determine how many witnesses are required or if a notary is required, and…..

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Protecting your house from Medicaid estate recovery

After the death of a Medicaid recipient age 55 or older, the state must attempt to recoup from the estate whatever benefits it paid for the recipient’s care. This is called “estate recovery.” For most Medicaid recipients, their house is the only asset available, but there are steps that can be taken to protect it. Life estates For many people setting up a “life estate” is the simplest and most appropriate way to protect a home from estate recovery. A life estate is a form of joint ownership of property between two or more people who each have an ownership…..

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Changes could be coming to estate tax, stepped-up basis rule

A new administration usually means that tax changes are coming. While it remains unclear exactly what estate and inheritance tax changes President Joe Biden’s administration and Congress will usher in, two possibilities are lowering the estate tax exemption and eliminating stepped-up basis at death. The first change would affect only multi-millionaires, but the second could have an impact on more modest estates and their heirs. In 2017, the federal estate tax exemption was doubled and indexed for inflation. For the 2021 tax year, the exemption is $11.7 million for individuals and $23.4 million for couples. As long as your estate is valued at less…..

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How will the coronavirus pandemic affect Social Security?

The coronavirus pandemic is having a profound effect on the U.S. economy, and it may have a detrimental effect on Social Security’s long-term financial situation. High unemployment rates mean Social Security shortfalls could begin earlier than projected. Social Security retirement benefits are financed primarily through dedicated payroll taxes paid by workers and their employers, with employees and employers splitting the tax equally. This money is put into a trust fund that is used to pay retiree benefits. The most recent report from the trustees of the Social Security trust fund concluded that the fund’s balance will reach zero in 2035……

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Medicaid’s gift to children who care for parents at home

In most states, transferring your house to your children (or someone else) may lead to a Medicaid penalty period, which would make you ineligible for Medicaid for a period of time. However, there are circumstances in which transferring a house will not result in a penalty period. One of those circumstances is if the Medicaid applicant transfers the house to a “caretaker child.”  This is defined as a child of the applicant who lived in the house for at least two years prior to the applicant’s entering a nursing home and who during that period provided care that allowed the applicant to…..

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