Are Your Social Security Benefits Taxable?

Many people don't know that the IRS can take a cut of their Social Security benefits. Find out if you're vulnerable.

Jan 19, 2014 at 8:35AM

Millions rely on Social Security to make ends meet in retirement. But few know that you can actually have to pay tax on your Social Security benefits under certain circumstances.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, runs through the rules governing whether Social Security benefits are taxable. He notes that the first key is to calculate your investment income and taxable distributions from retirement plans, and then add in half your Social Security benefits. If the resulting figure is above $25,000 for single taxpayers or $32,000 for joint filers, then up to half of your benefits could be taxable. For singles above $34,000 or joint filers above $44,000, up to 85% of benefits can be taxable. Dan concludes by noting that investors in tax-free municipal bonds are often surprised to find that they must add in their income for purposes of the Social Security tax question, making investments in iShares AMT-Free National Muni (NYSE MKT:MUB) and similar tax-free vehicles lose some of their appeal.

Make the most of Social Security
Taxable or not, Social Security benefits are essential, and you have to make sure you get every penny you're entitled to. In our brand-new free report, "Make Social Security Work Harder for You," our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

Fool contributor Dan Caplinger and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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