Retirement, Taxes & Social Security

How much money do I need to retire comfortably?

The amount depends on your expected spending, other income sources like Social Security or a pension, your health, and how long your savings need to last. A retirement income plan compares those numbers year by year to test whether your savings can support your lifestyle. FFA Wealth builds that projection with each client before recommending a strategy.

What should I do with my 401(k) when I retire?

Common options include leaving it in the employer plan, rolling it into an IRA, converting part of it to a Roth IRA, or taking a distribution. Each option has different costs, investment choices, and tax consequences, so the right choice depends on your situation. An advisor can compare the options side by side before you decide.

What is the retirement "tax bomb"?

The retirement "tax bomb" describes the large tax bills that can hit retirees who have most of their savings in pre-tax accounts like traditional IRAs and 401(k)s. Required withdrawals, Social Security taxation, and higher Medicare premiums can stack up and push income into higher brackets. Planning ahead, such as spreading withdrawals or conversions over several years, can help reduce the impact.

At what age do I have to take required minimum distributions (RMDs)?

Required minimum distributions generally begin at age 73 if you were born from 1951 through 1959, and at age 75 if you were born in 1960 or later. Missing an RMD can trigger a penalty of 25% of the amount not taken, reduced to 10% if corrected promptly. Planning withdrawals before RMD age can help manage the tax impact.

When should I start taking Social Security?

You can claim Social Security as early as 62 or as late as 70, and each year you wait past full retirement age raises your benefit by 8% until 70. Full retirement age is 67 for anyone born in 1960 or later. The best age depends on your health, other income, marital status, and tax picture.

How much of my Social Security is taxable?

Up to 85% of your Social Security benefits can be subject to federal income tax, depending on your "combined income" (adjusted gross income, plus tax-exempt interest, plus half of your benefits). Benefits start becoming taxable above $25,000 of combined income for single filers and $32,000 for married couples filing jointly. Virginia and South Carolina do not tax Social Security benefits.

When do I need to sign up for Medicare?

Your initial Medicare enrollment period is a seven-month window that starts three months before the month you turn 65 and ends three months after. Signing up late can lead to permanent premium penalties unless you have qualifying employer coverage. If you're still working at 65, review your options before your window closes.

What is IRMAA, and how can I avoid higher Medicare premiums?

IRMAA (Income-Related Monthly Adjustment Amount) is a surcharge added to Medicare Part B and Part D premiums for people with higher incomes. It's based on your income from two years earlier, so a large IRA withdrawal or Roth conversion can raise premiums later. Planning the timing of income can help manage IRMAA.