2025 Newsletter — Volume 1
Essential tax considerations in retirement1
When you're working, your employer usually pulls out income tax for you, which helps prevent any penalties on Tax Day. However, once you retire, you often have different sources of income that might not have taxes withheld. This means you may need to pay taxes at the end of the year or potentially estimated taxes throughout the year.
Grasping federal tax brackets and their mechanics is essential for thoughtful financial planning. This knowledge helps you make sense of your income, tax credits, deductions and the various tax strategies you might consider along the way. Here are some essential questions to assist new and soon-to-be retirees identify their federal tax responsibilities and understand how to manage them moving forward.
- Will my Social Security benefits be taxed?
- Do I need to take a Required Minimum Distribution (RMD) from any of my accounts?
- Will I pay Medicare taxes in retirement?
- Should I have taxes withheld from my retirement income?
- How will the IRS tax my retirement income?
Understanding your federal tax bracket is crucial during retirement, as it establishes your marginal income tax rate for the year. Remember, the more prepared you are for retirement, the more you can enjoy your golden years!
Tips for financial spring cleaning2
Organize your finances
List out what money is coming in, what money is going out and where it’s going. This includes looking at your income, financial accounts, investments and expenses to understand your financial situation.
Dust off the budget
Budgets are often easy to make but hard to keep. As such, they may be made and upheld for a while, but as time passes, they can become less and less strict. Spring cleaning and tidying up your finances can be a great opportunity to revisit your budget. Or, if you’ve never established one, it's an excellent reason to create one now.
Once you have your budget, you can sort it by "nice to have " and "needs to go" and adjust it accordingly.
Wipe away debt
If you have any debt lying around that you're not actively trying to pay off, you may be wasting money that could be reinvested in other areas of your life. To help prevent this from happening, try tracking all your debt and then plan to start getting rid of it.
Automate savings and investments
Automating the savings process is a great way to keep your finances clean and tidy. A “save first” (or "invest first") strategy can help you stick to your budget and ensure that your savings and investments grow consistently over time.
Who gets what? The importance of naming beneficiaries3
You might feel like you have everything in order. You work diligently, meet your financial commitments on time, make smart investments and may even have life insurance. But have you thought about what would happen if you were to pass away unexpectedly? Do you know who would receive your assets? While it’s not a comfortable topic, it’s essential to be prepared for the unexpected. One key part of that preparation is designating beneficiaries on your accounts.
First, do you know how beneficiary designations work, the various types of financial accounts beneficiaries can be named, whom you can name and more? Learn more about the importance of beneficiary designations.
Next, check your beneficiary designations today on BenefitsForYou.
If your plan does not allow for online naming of beneficiaries, please contact your HR department.