13 States That Tax Social Security

Investment fees are one of the two biggest detriments to successful investing. I discuss this in detail when it comes to using Monte Carlo analysis to determine one’s ability to retire in my podcast here.

In this video though I show you how a portfolio with an all-in fee of .18% has a 95.7% retirement success. Whereas the exact same portfolio with a 1.50% fee has a 74.4% success.

Everything is the same. I use the calculator at www.firecalc.com if you want to run your own numbers.

The lower cost portfolio not only had a 28% higher success than more expensive one but its average account balance after 30 yrs was over $1 million.

The higher fee portfolio average account balance after 30 yrs was less than $500k.

So, if an advisor were running a monte carlo analysis based on this portfolio and NOT taking into consideration investment fees that advisor would provide a very misleading end-result.

Now, the one drawback of Firecalc.com is it does not take TAXES into consideration. So you’ll have to do your homework on that. Taxes are a big deal and should not be overlooked.

However, for what it’s worth FIrecalc.com offers the best financial planning calculator on the web when it comes to retirement projections.

You can change your scenario a bunch of different ways. Too many ways to get into here.

I can not recommend this tool enough.

As always if you have questions, thoughts or concerns, please let me know.

Social Security is taxed at the Federal level. I show you how in this video: https://youtu.be/pntSF1F4C68

But did you know Social Security is also taxed in some states as well?

In fact, it’s quite amazing, if you ask me, the level from which Social Security is taxed in a couple of these states. For instance, there are definitely marriage penalties when it comes to how much retirement income a married couple has which is taxable as compared to a single tax payer.

Keep in mind though that in some states, looking at you Nebraska, a single taxpayer with income over $43,000 pay taxes on Social Security. Remember, this is Adjusted Gross Income too! Not Taxable income.

I can not stress the difference between the two. AGI (Adjusted Gross Income) is before any exemptions or deductions you have. In fact, it gets worse because the taxing authorities typically will use MAGI (Modified Adjusted Gross Income) which includes any tax-exempt interest you received as well. Now, by no means, am I saying you should not look to these states as your retirement destiny.

There are other tax consequences to consider; property tax, sales tax, investment tax, personal property tax etc. But at least if you watch this video and read the Kiplinger’s article you won’t be blindsided when it comes to file your state income tax return.

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