Retirement Income Blog

One of the advantages of immediate fixed annuities is the feature that provides you with income for the rest of your life, for both you and your spouse, or simply to pay you for a fixed number of years. But what’s the best choice for you? Let’s consider some payouts based on annuity type and other factors to get a feel for what to potentially expect.

We’ll hypothetically assume a man has $50,000 to invest in an annuity. He’s 70 years old with a remaining average life expectancy of 16 years. What kind of payouts can he expect to get?

If he wants an immediate fixed life annuity on himself, a hypothetical insurance company  determines a monthly payout for him based on his sex, age, investment amount, and the current interest rate. The current interest rate is particularly important since their profit will be based on how much they’ll get for investing his $50,000. They’re predicting the man will die 16 years later (at least that’s their bet based on the average life expectancy of males age 70) so they know how many monthly payments they must make. They’re obliged to keep paying if the man lives longer, but also get to keep the investment if the he dies earlier than expected.

Life Expectancy
In our hypothetical case, the monthly payout is $385.  Incidentally, if the man were 80 years old his remaining life expectancy would be 11 years. So the insurance company would pay out $554 per month since they’ll be statistically paying for fewer months.

Gender
Women statistically live longer than men. A 70 year old woman has a remaining life expectancy of 20 years. This implies more monthly payouts by the insurance company so her payout is only $352 for that $50,000 investment. And if she were 80 years old, her monthly payout would be $498 – somewhat less that then 80 year old man’s, because of her still longer life expectancy.

Joint Life
A married couple may opt for a joint life annuity where payments will continue until the second spouse dies. In the case that both are 70 years old, the insurance company would pay $318 since statistically it turns out that between the two, the survivor would statistically live longer. The payout remains the same even if only one remains alive 

Finally, if the single 70 year old man chose an annuity for a certain period – 10 years – under the prevailing rates, he’d receive $515. But in this case, the insurance company would pay his beneficiary the remaining payments if he died. The payout is the same for the women since there’s no age or age-related sex difference issue here.

For the most current rates, use the immediate annuity calculator.

Immediate fixed annuities are the payment of a single premium to an insurance company in return for periodic payments over a specific period or life.  Once payments begin, the annuity cannot be surrendered for value (there are a few companies that do allow commutation–the surrender of the annuity for a discounted refund).  Income from annuitization is taxed part as ordinary income and part as return of capital and a 10% penalty could apply if the recipient is under age 59 1/2. Any guarantees are based on the claims paying ability of the insurance company. Annuities should be considered long term investments. For other ways to generate income in retirement, visit the retirement planning center.

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While tax-free bonds can be a popular source of tax-free income, some retirees are not aware that they can receive a potentially higher source of cash flow from insurance companies using an immediate fixed annuity.

In exchange for the premium payment, the insurance company pays the annuity owner a cash payment for life or for a term of years. Each of these payments is comprised of interest and principal as determined by an actuarial calculation set forth in Section 72 of the federal tax code. The principal portion is not subject to income taxation. Once the owner has recovered his or her investment, the remaining payments will be taxed as ordinary income.|

Let’s take a look at the hypothetical case of Mr. Jones, age 70 with a $500,000 portfolio of municipal bonds, earning 4.17% tax free. He receives $20,850 of annual tax free income (4.17% x $500,000).

He decides to cash in his tax-free bonds and pay a premium to an insurance company of $500,000 for an immediate fixed annuity. With the immediate annuity, his yearly cash payment from the annuity would be $48,000 per year of which 65% is tax free (the tax free portion of an immediate annuity is the part the IRS considers return of your principal and is based on your life expectancy and the expected return). After taxes, he will have $43,800 to spend. His spendable cash increases by $22,950 annually ($43,800-20,850) over the tax free bonds.

You can see how much you could obtain form an immediate fixed annuity using the immediate annuity calculator.

So in this particular example, the yearly cash flow has increased by using the fixed immediate annuity. Of course, your results will vary based (among other things) upon your age, health, and premium payment. The payments in the example shown above are calculated on the life expectancy of the annuitant and the spot interest rates effective for the month of purchase under the contract. The spot interest rates can vary from month to month. The payments shown above are not subject to mortality fees, administrative charges, or other expenses. However, actuarial calculations, life expectancy assumptions, and interests rates can vary from insurer to insurer. Therefore, your results will likely vary from the examples shown above.

An immediate fixed annuity will usually not leave anything for your heirs unless you purchase from a company that offers a refund feature. This refund feature will typically reduce the size of the monthly annuity payments. The amount of the refund could also be reduced by surrender charges in some cases. Therefore, the fixed immediate annuity is generally better suited for people who place more importance upon increasing lifetime cash flow rather than leaving an estate to heirs.

Of course, an immediate fixed annuity or tax free bonds would only be a portion of a retirement portfolio and resources in the retiremenmt planning center can help you plan your entire portfolio.

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Let’s work up the ladder of rates that you can get from guaranteed retirement income sources. We skip treasury securities because bank deposits pay more and they also have a federal guarantee (up to $250,000 per depositor through 12/31/2009)

Bank Certificates of Deposit – in terms from 3 months to 5 years.  Generally, the longer the term, the higher the rate.  Interest is available monthly for a guaranteed retirement income or can compound. FDIC insured.  Rates available daily across the US at bankrate.com.   One year CD is 4% at most banks as of 10/28/08.  After inflation and taxes, you actually lose money.  Therefore, holding large sums for long periods in CDs is financially foolish.

Annuities—guaranteed by the issuing insurance company, safest companies rated AAA by Standard and Poors.  Large companies like Prudential and New York Life actually lent money to the US Government during the depression so deposits with them are pretty safe.  Use deferred annuities  (paying 5% or so) if you don’t need the income or immediate annuities if you need the income (often called retirement annuities).  A 70 year old male can get $769/month for life on a $100,000 deposit (equal to a 9.2% cash on cash return).  Payments end at death and nothing is left.  Some immediate annuities provide a feature for payments to heirs in case of early death.

Federally Backed Mortgage Notes—Although you’ve heard a lot in the news about Fannie Mae and Freddie Mac, the US government has backed their securities 100% giving them AAA safety.  The same goes for Ginnie Mae Securities.  Your money gets loaned for mortgages and the government agency guarantees your investment.  At 15 years, rates approximately 6%.  Actual term is uncertain as people can pay off their mortgages early.  Income is monthly.

Municipal bonds—a source of guaranteed retirement income from cities, states or municipal districts.  Buy those rated AAA for best security. Income is paid twice annually. Or, for another idea of guaranteed retirement income, build a ladder of zero-coupon municipal bonds.  Interest and principal is paid all at once at maturity.  Example:  male age 52 buys $75,000 face value of municipal bonds to mature starting at age 62 and for each year thereafter for 20 years to provide $75,000 of tax free income annually.  Cost today of each bond averages less than 40 cents per face value. Yields of 6% tax free currently.

Corporate bonds and preferred shares can be are a reliable source of guaranteed retirement income from corporations.  Again, for safety, buy those that are highly rated, at least A.  Some opportunities to get 8% at the current time.  Bonds pay interest twice annually and preferred shares pay dividends quarterly.  Dividends from preferred shares qualify for a reduced 15% income tax to help with tax planning.

Diversify amongst these guaranteed sources of retirement income and enjoy a more comfortable senior citizen retirement.

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A New Type of Trust May be Able to Solve Many Estate Planning Problems

Many wealthy Americans today are worried about what will happen to their estates after they are gone. Although many different types of trusts have been designed to help alleviate this problem, a new type of trust, called the “inheritor’s trust” has a level of flexibility that is unmatched by other estate planning vehicles. This type of trust is a dynasty trust, similar to many other types of dynasty trusts, except that this trust is a “stand alone” trust that allows for changes in investment strategies, as long as the beneficiary is willing to discuss the situation with his or her grantors.

A dynasty trust is one tool of estate planning strategies for the well to do.  Dynasty trusts are multi-generational trusts created specifically for descendants of all generations. Dynasty trusts can survive 21 years beyond the death of the last beneficiary alive when the trust was written. Assume that wealthy Mr. Henderson uses this estate planningstrategy at age 80.  He has a new born grandson.  Assuming the grandson lives to age 90, the trust would continue for 111 years.  This trust could provide retirement income for several generations.

 This type of trust can potentially provide substantial benefits for those seeking long-term, multi-generational planning, such as the type designed to avoid the generation-skipping transfer tax. It can also protect against divorce, creditors and estate taxes as all assets in the trust are immune to liabilities of the trust beneficiaries (this is a basic estate planning strategy–place assets in trust for protection form creditors). Any parent that is currently gifting assets to their children on any kind of regular basis should seriously consider establishing one of these trusts. The key difference between this type of trust and other trusts is that the beneficiaries must be willing to talk openly with their grantors regarding how they want the money invested or handled.

In order to establish an inheritor’s trust, an irrevocable dynasty trust must be established first. The inheritor is more often than not the trustee, and must usually choose a close friend or confidant to be the distribution trustee so that the trustee willingly makes distributions for supplemental retirement income to the beneficiary. This trustee has absolute control over what kind of distributions are made from income and principal. However, this transference to a third-party trustee is exactly what makes the assets of the trust so secure from creditors. Beneficiaries have absolutely no legal right to force any kind of distribution from the trust, which renders creditors unable to force any type of distribution from the trust as well. It is important to select the correct state to create the trust in, as the validity of these trusts will vary according to state law.

If you are worried about your estate tax situation or whether your beneficiaries will be able to do what they want with your assets once you are gone, contact experience legal counsel for the right estate planning strategy. The legal system provides many tools for sophisticated estate planning strategies but do people use them?

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Realize first that the term “financial advisor” is a generic term  much like “retirement advisor“and can mean almost anything.  In fact, most “financial advisors” make commissions by selling products. Which means that while they may be sincerely interested in helping you, they earn nothing until you buy something.  So if you want advice and not products, that you want to engage a financial advisor and pay for their time and find a financial advisor just as you would an attorney or a CPA.

The first thing you would do to find any financial professional is to ask people you know and trust.  Ask your CPA, attorney your banker.  Be careful–are they giving you the name of a sales person or advisor?  If you want advice, then you want a fee-only financial advisor.  Some fee-only financial advisors are members of NAPFA.org and you can get local referrals from them. You can also get a referral from the local Financial Planning Association.  These referrals would be the same as using a lawyer referral service.  There is no guarantee of quality using such a referral service and while an option, may not be the ideal way to find a financial advisor.  but if you get several such referrals. you can compare.

Next, check them out on their web site.  Does their philosophy and tenor strike a cord with you?  No web site?  Then pass.  Any financial advisor without a web site is not worth considering as a professional. 

After talking with people you trust, getting referrals, checking out the web sites of advisor referred, you will hopefully have a couple candidates that look like a fit.  Now, check their background–a critical step to find a financial advisor.

Ther first check is at http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/index.htm.  At this site you can check their status with FINRA, the organization that licenses them to earn commissions (if they are so licensed) or their status as a registered investment adviser (a required certificate if they charge fees).

They likely also have an insurance license so locate the State Department of Insurance web site and you will find a way to check agent licenses there.

Additionally, the financial advisor may have credentials such as certified financial planner(tm), registered financial consultant, certified retirement planner, etc.   If they have credentials, you will be able to check the status of their credentials with each of the organizations that has granted the credentials as follows:

CFP(r) http://www.cfp.net/search/
CPA — a state by state check — look on the web for your state Board of Accountancy
ChFC - There is no complaint or disciplinary process for either the ChFC or CLU designation so there is no way to check on these folks (YIKES!)

Interview your advisor and ask the following questions:

What’s your investment philosophy?
What percentage of your clients are people like me?
How do you charge?
What is your communication model–how frequently and how do we communicate?
What are your specialties?
In addition to your specialities, can you help me with (fill in issues of concern to you)

Because the relationship with a financial advisor is important, completing the above steps to find a financial advisor, while cumbersome, is worth it.  And if you do it well, you only need to do it once.

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Although there are several flavors of annuities, the term “retirement annuity” typically refers to an annuity taken from an employer pension plan (e.g. monthly payments for life) or a non-qualified annuity purchased by an investor with after tax funds in return for monthly payments from an insurance company.  Retirement annuity rates or monthly payments will depend on the amount you invest, your age and the term you select for payments (you can generally select payments over 5 years or lifetime).  If you select lifetime payments, both you and the insurance company share risk on your life expectancy.  If you get hit by a bus and killed tomorrow, payments stop, they keep all your money and they win.  If you live to age 110, you get a great retirement annuity rate and they will be sorry to have you as a client they must pay for life.

A retirement annuity provides dependable security–think of it like another social security check but likely better.  While the Social Security system is upside down (has more payments due than it will have assets), commercial insurance companies invest and preserve your money to pay your claim.

To purchase a retirement annuity from an insurance company, you make a one-time payment and distributions typically begin within a month. A retirement annuity can be fixed or variable–your payment can be the same every month, you can opt for smaller payments in the beginning that grow over time (i.e. inflation adjusted) or you can have your payments based on a menu of investment options and you take the risk of how well the investments perform.  In  the case of the variable annuity, retirement annuity rates cannot be forecasted although some annuity companies will provide a minimum guaranteed rate of return.

In the case of he income payments you receive from a “fixed” retirement annuity, these will never change and are based on the amount you deposit, the age when you start and the interest rate environment at the time of purchase.

You can check retirement annuity rates with the immediate annuity calculator.  For an even more current quotation, ask your retirement consultant to get quotes from a number of insurance companies.

Note that the quotes you receive will show the monthly payment you get.  You will likely not see any interest rate on these quotes because the total payments to you may be unknown in the case of a life annuity, i.e. no one knows how much you will receive.  But if you died at your life expectancy, you could calculate the retirement annuity rate and get an internal rate of return about 2%.  You may be surprised why anyone would buy a retirement annuity at such a low rate.  It’s because of the security involved–no matter how long you live, you cannot outlive the funds on a lifetime retirement annuity.  The insurance company takes a substantial risk and provides a relatively low rate when priced to life expectancy.

If you are age 70 or above, you will likely not find a source of cash flow larger or safer than what you can obtain from the retirement annuity, with the comfort of knowing your payments are quite secure from a AAA rated insurance company. Even though the retirement annuity rate may be low (because your principal is never recovered), the monthly payments cannot be matched by an alternative with the same degree of safety.

Additionally, under current tax law, a portion of each payment received from a retirement annuity is tax-free until your total premium is recovered. The remainder of each payment is taxed as ordinary income in the year received.

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If you don’t want to waste your dollars, its critical that you understand estate tax planning basics and how to avoid estate tax.

The Annual Report on the United States Government reports that Americans paid $26 Billion in estate taxes in 2006. Every dime of those taxes could have been avoided.  How do you think the kids felt when they wrote out a check for $300,000 for estate taxes and then learned from the attorney that mom and dad could have saved them every penny?

If you don’t like wasting money on taxes and don’t want your kids squandering money either, then these estate planning basics will explain what you need to do.

You must realistically answer these questions: 

1. Will your estate be worth more than $1 million ($2 million for a married couple) when you die?   If Congress does not change the estate tax rates and limits, from 2011 and later, estates above $1 million will be subject to estate tax.
 
2. Do you have any assets that could be double-taxed at your death (double taxed by income and estate taxes, which could consume 70% of the value) such as IRAs and annuities? Estate planning basics require that you plan now to avoid this double tax and there are many ways to do so.
 
3. Do you think that if you need to take action, that your attorney would call you up on the phone and tell you? (He probably won’t as many attorneys wait until you call them).  So an important estate planning basic is that no one will tell you what to do.  You need to ask.
 
4. Do you think you have plenty of time to take care of any estate tax problem–like the people who paid $26 billion last year?  Probably the most critical of the estate planning basics is to not procrastinate.  Death does not discriminate by age.  If you are 35 and have a family, get your estate planning in order now.
 
5. Do you incorrectly think that estate planning means giving up control of assets or making gifts or giving to charity?  (A fundamental of estate planning basics is that you can keep total control of assets yet still remove them from your taxable estate).
 
6. Do you have the false notion that a living trust will eliminate your estate taxes?(You will pay estate taxes on assets over the exempt threshold, living trust or not).
 
7. Do you think that you need to die in order to get your estate tax exemption? (You don’t, $1 million is available right now and many wealthy people use their exemptions when they can make the most of them, during their lifetimes).

If you answered “yes” to any of the above estate planning basics misunderstandings, you probably have an estate tax problem.

Your next step–ask your retirement consultant or your CPA what you need to do to get your estate in order.

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Company retirement plans come in two flavors–defined benefit (based on an ultimate benefit to be paid upon retirement) and defined contribution (based on the amount that gets put into the plan today).  These are both referred to a “qualified plans” because they qualify for tax deductible contributions under section 401 of the Internal Revenue Code.

No matter what type of plan pertains to you, at least 10 years prior to retirement, make an estimate of the income you need using the retirement planning calculator and determine what portion of your retirement needs the company retirement plan will provide.

In a defined benefit plan, the benefit is spelled out such as a retired employee receives a specific amount based on salary history and years of service, and in which the employer bears the investment risk.  For example, upon retirement, the employee receives from the company retirement plan 2% of their final year’s salary times the number of years with the company.  So if they had 20 years tenure, they would retire with a benefit equal to 40% (2% x 20) of their final year’s salary. The employee, the employer, or both may make contributions.

Defined contribution plans are more common in the US and allow the employer and/or employee to make contributions, so that the final benefits depend on how much was in the account and the rate earned by the account’s investments. An individual accounting must be set up for each participant in the plan although the funds can be one large pool. The federal government does not guarantee a participant’s pension benefits; instead, the plan is “participant-directed”, meaning that the employee makes the investment decisions based on the employer’s options. Contributions have a limit of $46,000 for 2008 or 25% of the participant’s total compensation. The different defined contribution company retirement plans are:

Profit sharing plan–they have nothing to do with sharing of profit so don’t get excited.  They should be called “discretionary plans” because management makes a discretionary decision how much to put into the plan each year.  Once the amount to be contributed to the company retirement plan is decided, the formula to allocate amongst employees may be very simple, such as a percentage of salary.  An employer alone makes contributions based on an employee’s current-year compensation.  If the employer also wants the employee to have the opiton to contribute, this is now a 401k plan.

Stock bonus plan: A type of profit sharing plan, where contributions are made in the form of company stock.

Money purchase pension plan: a company retirement plan with fixed-percentage compensation by the employers. Unlike profit sharing plans, these contributions are mandatory every year, regardless of profits or other factors.  Such a plan may simply be an annual contribution by the company such as 3% of pay.

In all cases, the government allows the employer to exclude from the company retirement plan part time employees (those working less then 1000 hours annually).  Additionally, those under age 21 can be excluded.  Even after attaining 2 years of full time work, the plan can have only vested benefits.  This means that whatever amount has been placed into the company retirement plan, it may not be fully vested to the employee until after 6 years.  For example, if the employee leaves the company after 2 years, he would get 20% of what the company had contributed for him and leave the rest behind (the forfeited amount gets allocated to the remaining employees in the plan).

Employers may also have company retirement plans that are different than the above or discriminate in favor of highly compensated employees or management.  These non-qualified retirement plans do not meet the IRC or ERISA requirements. These plans are funded by employers and are more flexible but they do not have the tax benefits qualified plans do. Benefits are paid at the retirement age in the form of annuities, which are taxed as ordinary income tax, or in lump sum payments, which cannot be rolled over into IRAs.  One can use the fixed annuity calculator to determine if the amount paid by the company will be better or if a lump sum should be taken for purchase of an individual annuity contract.

Post provided by Javelin Marketing

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There are 3 ways that financial advisors or retirement advisors can charge in the US:

They can charge commissions based on transactions.  For example, when you buy or sell a stock or a bond.  The typical fees to a full service firm ,e.g. Merrill Lynch, where you value their research and recommendations, maybe 2% for a transaction.  So if you buy $10,000 of stock, your financial advisor fee is $200.  The same transactions can be made through any discount broker for $9.99 so you better feel that their advice is worth the commission paid to a full service broker.  At least when you buy an exchange listed stock, the financial advisor fee is transparent and printed on the confirmation.  (This is not true if you buy a stock in which your broker is also a dealer–the markup on your purchase is similar to a bond purchase described below).  By the way, your Merrill Lynch broker gets 35% of the commission he generates and Merill keeps the other 65%.  If your financial advisor is independent and does not work for a large firm but works with an independent broker dealer, then he keeps typically 90% of commission generated.

Not so if you purchase a load mutual fund or a bond.  In the case of a load mutual fund, the financial advisor fee is set by the fund and buried in the prospectus.  Typically, this fee will be 4% of the initial investment (i.e. $400 on a $10,000 transaction) or 1% annually.  if you don’t read the prospectus, you won’t see the financial advisor fee printed on the confirmation.  In the case of a bond, the fee is not disclosed.  Guidelines allow the brokerage firm to buy bonds, mark them up as much as 5% and then sell them to you for the 5% profit. The profit is not disclosed to you.  You may be shocked that this is the way financial advisor fees work on Wall Street.  Welcome to your education.

The second way that financial advisors assess fees is a non-transaction based system.  Foe example, they may manage your portfolio and charge you 1% annually of the portfolio value.  This system usually requires you have at least $100,000 portfolio and the financial advisor fee is $1,000 annually on such an account.  These advisors must have a registered investment advisor certificate (most financial advisors do not as they charge commissions) and with a registered investment advisor, the fee is fully disclosed in a separate management agreement and on your quarterly statement.  Your account is held at a discount brokerage firm that earns $9.99 each time there is a transaction in your account.  Your advisor gets no portion of that so he has no incentive to make trades.  His incentive, based on the structure of his financial advisor fee, is to keep you as a cliert for a long time (so he gets to collect the fee each year) and make your account grow (as that’s the only way he gets a raise).

A registered investment advisor may also charge fees for time.  For example, to do a a financial plan that may take 10 hours he charges $1,500.  Again, this is fully disclosed in the investment management agreement you must sign. Close to this would be a fee charged for a project.  Let’s say you own eight rental houses and want to know which homes are best to sell given the tax implications and cash flow.  The advisor can take on a project either for an hourly fee or project fee on which you both agree.

Last, some financial advisors charge incentive fees.  However, US regulations only allow wealthy investors to pay incentive fees because the government believes this is a risky way to invest.  The typical hedge fund, which requires a $1 million investment (and thus only deals with accredited or wealthy investors) will charge a financial advisor fee of 2% annually plus 20% of profit.  The belief is that this financial advisor fee structure incents the advisor to take larger risks because he gets a piece of the profit and thus the government allows such arrangements only when the investor is wealthy.

If you don’t know how you are being charged, ask.  Fees could be hidden and you may be shocked to learn how you pay your financial advisor and what you pay for retirement help.

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Immediate annuities pay a regularincome and because the payments are based on age, it only makes sense for people age 60+ to use these vehicles (the higher the age when you invest, the higher the payment–see the immediate annuity calculator).  The senior tax break is that IRA considers some of the payment return of principal (untaxed) and some of the payment interest (taxed).  For an investor age 60+, 60% or more of each payment will not be taxed (unless the investor exceeds their life expectancy in the case of a life annuity).  The fact that IRS excludes a portion of the payment from tax is a tax break for seniors.

Social Security Income is Taxed on  Favorable Basis

While working people pay tax on their social security income, seniors pay tax on only part their social security income.  The portion of social security income that is taxed can vary from 0% to 85%, based on the senior’s total amount of income. Since only people age 62 receive social security retirement benefits, we can refer to this as a tax break for seniors. Retirees can actually manage their finances to reduce taxes on their social security benefits by moving money from assets that increase total income (CDs, bonds, tax free bonds, savings bonds) to deferred annuities or immediate annuities, some or all of the income form which does not appear on the tax return.  These investments lower the total income appearing on the tax return and thus the percentage of social security income subject to tax. 

Control the pace of IRA distributions

People age 70 1/2 must take distributions from their IRA, but above a minimum required amount, they can decide how much to take.  The less they take, the less tax is paid today.  Over the last 10 years, the government has reduced the minimum amount that needs to be taken creating a tax break for seniors. As a senior, you can manage your finances to take just the minimum required IRA distribution and using non-IRA assets for living expenses.

Select Which Funds to Use First and Reduce Your Taxes

If you spend $ of your IRA money, you may pay up to 35% tax on that IRA withdrawal.  But if you spend $1 from your savings account, you pay no tax to withdraw that money.   Therefore, because as a senior, you live off different parts of your nest egg, you can control your tax bill in a way that working person living from salary cannot.

 Long Term Care Insurance-two levels of tax breaks for seniors

The federal government wants you to have long term care insurance so they provide two senior tax breaks as an incentive (see estimated costs using the long term care calculator).  Since the average buyer of long term care is age 60+ any tax breaks regarding long term care are essentially tax breaks for seniors. Although not many people qualify for the first tax break, to the extent your out of pocket medical expenses and health insurance premiums exceed 7.5% of your adjusted gross income, you can deduct that excess as an itemized deduction on our tax return.  There is a limit to how much can be deducted but that limit increases with age–in effect an age-based tax break for seniors.

Want to know more about tax breaks for seniors? Click on the booklet to get your copy.

Tax Breaks for Seniors

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