What States Have The Lowest Taxes For Retirees - Use This Amazing Calculator!

One of the biggest issues facing retirees is the same issue they faced while working full time - taxes. More specifically, retirees want to know what states have the lowest taxes for retirees and the good news is that there are 37 states that don't tax Social Security. Here is the list...Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Mississippi, Nevada, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Virginia, Washington (state), Washington (D.C.), Wisconsin, Wyoming.

There are other states like Kansas that tax Social Security only on higher income households. For instance, Kansas receives no tax on Social Security if the adjusted gross income for the household is under $75,000. 

More good news lies in the fact that some states don't have income tax at all, Florida for example. 

If you are interested in finding out if your prospective state is tax friendly then I have discovered an amazing calculator that you can use to determine how you will fare on your retirement taxes and you can access it here.

Let's look at the tax scenario for Bob and Jane. They live in Missouri so click on the state of Missouri. You will be brought to a calculator page. Bob and Jane will file a joint return. They have an annual Social Security income of $32000, a retirement account annual income of $9000, a public pension annual income of $15000. The calculator indicates that Bob and Jane will pay $0 of taxes to the state of Missouri and only $2369 to the federal government.

A big part of Bob and Jane's retirement scenario is their tax liability goes way down and thus there retirement income will go further.

Amazingly, if Bob and Jane moved across the border to Kansas their state taxes would be $0 and their federal taxes would be $352!!!

Obviously, where you live in retirement matters a great deal when it comes to taxes. 

I encourage you to spend some time on the smartasset.com site. It is one of the better sites on the web for retirees who may be curious about taxes, investing, saving, credit and debt reduction.

Side Hustles For Retirees - Nick Loper Shares His Incredible List!

Retirement has really morphed over time to be different things to different people. No longer do people work 50 years at the same job and then collect a juicy pension. Today more and more people are seeing the need to supplement their retirement income with side jobs or as they are called today - side hustles for retirees.
What is a side hustle? Well according to Nick Loper, the author and creator of www.sidehustlenation.com, it is any job or business startup that allows you to earn more money, pay off debt, use free time more productively, escape the rat race or learn new skills. Nick's site is absolutely amazing and I highly encourage you to visit it and linger there because you are going to learn so much about how you can transform your retirement years to an exciting journey of discovery and profit.
In fact, Nick offers a free lengthy post in which he unveils 250 side hustle ideas. The fact that he can reveal so many possibilities is a testament to the depth of his blog! You can access his list here.
Just take my word for it, you are going to be blown away by the suggestions that he provides.
For instance, Nick shares four different ways you can make money with your car.
You can make money driving your car through Lyft and Uber.
You can make money delivering with your car through Ubereats and Doordash and 10 others.
You can make money renting your car through Turo and GetAround.
You can make money through advertising with your car with Wrapify and Carvetize.
That is just a quick rundown of ways to use your car. The list of 250 is just priceless and if you are looking for a way to give meaning and added income to your retirement then Nick Loper is the Pied Piper of side hustles and you need to check him out right now.
Retirees who pursue side hustles are finding their departure from the workplace to be enjoyable and exciting.
Let me know in the comments what you think of Nick's incredible list.

9 Reasons Why Not To Buy An Annuity And Why Annuities Are A Poor Investment Choice

If you are like me and you are nearing your target date for retirement you are trying to answer a lot of questions. You most definitely are trying to figure out how to make your 401K money last the rest of your days. You have undoubtedly explored the subject of annuities and this article will attempt to answer the question "Why not to buy an annuity"?
I will give you a quick 9 reason rundown that show why annuities are a poor investment choice. Reason #1 - In the case of immediate annuities you get a flat fixed payment every month for the rest of your life but there are no adjustments for inflation. In a 401K or 403B you can adjust your distributions but this is not the case with an annuity.
Reason #2 - You have no access to the principal in the event that you have an emergency and need a lump sum of cash. This represents one of the biggest advantages of traditional retirement accounts.
Reason #3 - You can set up an immediate annuity so that you get a lifetime monthly amount as long as you or your spouse are alive. However, once both of you are gone there is no leaving the rest to your kids. If leaving your nest egg to your kids is a real priority to you then don't invest in an annuity.
Reason #4 - Most annuities come with commissions and fees. Sometimes the annual fees can be in the 3% to 4% range. There is a reason why insurance agents are so gung ho to sell you an annuity, they make a hefty commission. You need to remember that annuities are insurance products and agents make their living on commissions!
Reason #5 - Typically there is a period of time where the balance of your annuity can be withdrawn, this is usually a period of several years. However, there is most often a surrender fee of about 10%. So, if you have a $50,000 balance that you want to withdrawn you will owe $5000 in a surrender charge. That is a definite disadvantage to owning an annuity.
Reason #6 - Speaking of fees most variable annuities have annual fees to cover miscellaneous costs and these can run in the 3% to 5% range. Again, that is a lot of money. People fall in love with the income guarantee but fail to scrutinize the fees.

Reason #7 - Annuity returns are based on interest rates. With interest rates at historically low levels right now it would be unwise to purchase an annuity. If you are just determined to get one then at least wait if you can to see if rates improve and thus your monthly payout will increase too.
Reason #8 - Annuities are only as reliable as the insurance company from which you buy them. Make sure that the company has a long history and a long history of A or A+ ratings. The good news is that many states have "guaranty funds" set aside to protect consumers who buy annuities from companies that fail. Check your state for such a fund and check to see if there are limits of coverage.
Reason #9 - The fine print can be very complicated. Once again, these annuities are insurance instruments and insurance companies are known for "the fine print".
Most people will be better served investing in traditional 401K plans. But if you are going to go the annuity route do your homework!

How Much Can I Withdraw From My 401k? The 4% Rule Reconsidered

If you are anticipating a retirement date in the next five years then you have no doubt begun to search for the answer to "how much can I withdraw from my 401K"?
If that is indeed your story then you have undoubtedly run across hundreds of stories on the internet about the 4% rule. The 4% rule simply says that if you have $200,000 in a retirement account then you can safely withdraw 4% of that money out annually.
Let's see how that works in reality. I will be using this nifty site to make my calculations, you can access it here.
First, let's see what 4% of $200,000 is on an annual basis. The answer is $8000. Nearly all the financial planning gurus will tell you that if you have $20000 in your account then don't withdraw more than $8000 a year out. By the way, $8000 annually is $666 a month. Let's plug those numbers into the calculator that I gave you above. Starting with $200000 at $666 a month with no annual increases at a reasonable 3% return rate in a 12% tax rate your money will last over 30 years.
If you start withdrawing your money at age 66 your money will still not have run out at age 96. Let's face it, the average man in the U.S. will live to 81 and the average woman will live to age 86. Now if you are just 'hell bent" on leaving your kids (if they are still alive) your remaining 401K then by all means use the 4% rule. But let's rethink this rule just a bit.
Let's consider the 6% rule. Six percent of $200000 is $12000. The 6% rule will allow you to withdraw $12000 a year or $1000 a month. How long will that allow your money to last? Using the same calculator we get $200000 at $1000 a month with no annual increases at a reasonable 3% return rate in a 12% tax rate your money will last 22 years. If you start taking this 6% monthly distribution at age 66 you will finally run out of money at age 88.
If you live to age 88 then there are probably so other options to help when your money runs out of your 401K. Maybe selling the house or using a reverse mortgage. Maybe you are going to live with one of the kids or possibly be in a care facility. I don't know your circumstances and you probably won't even know your circumstances at that point. But the difference between $666 a month and a $1000 a month is pretty substantial and worth considering the appropriateness of the 4% rule.
The chances of living to 96 are pretty slim and you wouldn't be that much of a gambler to use 5% or 6% distribution to put your retirement budget together. Remember, you can always make adjustments along the way.