FEATHERING YOUR RETIREMENT NEST

FEATHERING YOUR RETIREMENT NEST

What will you look for as you approach your \golden\ years? Will
it be an affordable condo on the golf course with room for the
grandchildren to visit? Must it be close to friends and family
or new \senior\ friends living close by? Should it be near good
medical facilities?

The average householder 65 or above earns only two-fifths as
much as earners age 45-54 (who are at their peak earning years).
Even though many \goldenagers\ are now free from the
encumbrances of children and work-related expenses, the costs of
daily life must be planned. Income must be protected to assure
its availability for household expenses and higher health care
costs.

The \goldenagers\ have even more than lifestyle questions to
consider in choosing their retirement nest. You should take a
look at the effect of state tax structures on your projected
retirement income. It\'s important to look at the following key
tax areas:

TAXATION OF EARNED AND INVESTMENT INCOME If you plan
to continue working, you need to take a look at the way states
vary in taxing your income. Some states do not make an exception
for age, some give tax breaks and some do not tax earned income
at all for \goldenagers.\ PENSION INCOME TAXATION
Many \goldenagers\ depend on the income from military,
government or private pension plans to survive. Some states
exempt all pension income from taxation , others exempt only
certain types of pension income and other states place caps on
non-taxable pension income. TAXES ON SOCIAL SECURITY
BENEFITS Social Security benefits are important to all
\goldenagers.\ Some states do not tax this benefit at all, some
follow federal tax formulas for determining taxes on the
benefits, but still other states have their own formulas to
determine the tax due. PROPERTY TAX Some states
offer advantages to \goldenagers\ such as homestead exemptions
that can be helpful in reducing property tax burdens. Remember
to check the tax laws regarding taxes on personal property,
especially cars and boats. SALES TAX RATES Nearly
every state, and often localities within each state, tax
clothing, gas, household goods and sometimes even food and
drugs. When you budget your fixed income for these items,
remember to consider the sales taxes as you move to your
retirement nest. ESTATE TAXES Even though these taxes
will not affect your cost of living as a \goldenager,\ they
should be considered as you build your nest. Some states tax the
surviving spouse on a portion of the inheritance which in
another state would pass to him or her without being taxed.
States are studying how to make their financial environments
\friendlier\ to seniors so watch for changes in state estate tax
codes.

A decision for your \golden years\ cannot be based on any one
tax consideration. You need to examine your overall financial
situation and consider the options in the attempt to make your
retirement nest free from financial stress.