How you can minimize your taxes on Social Security benefits

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Financial security expert and a two-time New York Times bestselling author, Pamela Yellen on how people can reduce the taxes on social security benefits and other taxes they need to pay in retirement?

How You Can Minimize Your Lifetime Tax Bite­

As a consultant to more than 40,000 financial advisors, Pamela investigated more than 450 financial products and strategies. Her research led her to a little-known method that prudent, fiscally savvy Americans have used to secure their savings in every period of boom or bust for over 160 years. This strategy utilizes a specialized form of dividend-paying whole life insurance, and is covered in her new book “Rescue Your Retirement: Five Wealth-Killing Traps of 401(k)s, IRAs and Roth Plans — and How to Avoid Them.”

Lower taxes on social security benefits, business owner tax breaks and more

  1. Retirement income with no taxes due. In the most common type of policy, the tax treatment is similar to Roth plans but without the restrictions of a Roth plan. “You put in dollars on which you have already paid income tax. You pay your taxes up front while you know what they are and eliminate any unpleasant surprises in the future. Tax rates are likely to go up over the long term, and if you are taking income from tax-deferred IRAs or 401(k)s, the tax bite can be enormous.”
  2. Reduced taxes on Social Security benefits. “Many people don’t realize that it’s fairly common, even for middle-income folks, to pay taxes on Social Security benefits. However, the income you take in retirement from a Bank On Yourself policy is not included in the income totals the IRS uses to determine whether (or how much) your Social Security check is taxed.” It can also reduce your Medicare premium by up to one third.
  3. Tax breaks and other benefits for business owners. The Bank On Yourself savings method allows business owners to recapture the interest they would otherwise pay to financial institutions, and to self-finance business vehicles, equipment, office buildings, and other expenses. This may qualify the business owner for tax breaks for interest and depreciation.
  4. Income tax-free estate. “The death benefit, which is typically many times greater than your cash value, passes to your loved ones and favorite charities income tax-free. It avoids the expense and publicity of passing through probate, too.”

“With a Bank On Yourself-type policy, it’s possible to take a retirement income without taxes due under current tax law,” Pamela says. “Of course, tax laws can change, but these tax benefits have withstood the test of time.”

About the Author:

Pamela Yellen is founder of Bank On Yourself, a financial investigator and the author of two New York Times best-selling books, including “The Bank On Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future.” Pamela investigated more than 450 financial strategies seeking an alternative to the risk and volatility of stocks and other investments, which led her to a time-tested, predictable method of growing wealth now used by more than 500,000 Americans. Her new book is “Rescue Your Retirement: Five Wealth-Killing Traps of 401(k)s, IRAs and Roth Plans — and How to Avoid Them.” Visit www.FreeRetirementPlanRescueBook.com.

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About the Author

Pamela Yellen
Pamela Yellen is founder of Bank On Yourself, a financial investigator and the author of two New York Times best-selling books, including her latest, "The Bank On Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future." Pamela investigated more than 450 financial strategies seeking an alternative to the risk and volatility of stocks and other investments, which led her to a time-tested, predictable method of growing wealth now used by more than 500,000 Americans.

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