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How Social Security and Taxes Work Together – And What It Means for You

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Here's a crucial fact most retirees don't anticipate: a significant portion, up to 85%, of your Social Security benefits can be subject to taxes. If you're not careful with your overall financial strategy, you could inadvertently trigger unnecessary tax burdens on both your investment income and your Social Security benefits.

While Social Security benefits were once largely tax-free for everyone, the rules have changed. Today, if you have other sources of income – whether from IRAs, pensions, or even part-time work – you might be in for an unwelcome surprise when tax season arrives.

The Essential Connection: Social Security and Tax Planning

This is precisely why Social Security planning must go hand-in-hand with comprehensive tax planning. Treating them as separate entities can lead to inefficient outcomes and higher tax bills.

At Asset Preservation Wealth & Tax, we emphasize strategic planning that looks at your full financial picture. Tools and strategies like a Roth conversion or properly timed withdrawals from your IRA can be instrumental. These approaches are designed to reduce your taxable income, which in turn helps you minimize the taxes on your Social Security benefits and ultimately allows you to keep more of your hard-earned money. We believe in looking at your full income picture, not just one piece of the puzzle, to create a truly integrated and tax-efficient retirement strategy.