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Social Security Tax Break

Tuesday, 01 February 2011

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For the next two years, the social security tax that is withheld from an employee's paycheck is reduced from 6.2% to 4.2%. This concerns me because I keep hearing that social security is not going to be fully funded in the future. I guess the logic is to worry about that problem later. So my purpose today is to give you some recommendations of what to do with your larger paycheck.

I think this is a great opportunity for you to increase your retirement contributions. If you make $100,000, you will have a extra $2,000 for the year. I recommend that you increase your 401K (457 or 403B) or IRA accounts by 2%. This amount is tax deferred and able to grow tax free until you need it in retirement. This will help you increase your retirement savings so that you are not completely dependent on social security.

If you are younger than 50 years old, you can contribute as much as $16,500 to your 401K in 2011, And another $5,500 if you are 50 or older for a total of $22,000.

About the author

Carol Somoano, MBA, CFP®

Carol Somoano, MBA, CFP^®Financial Advisor

Carol Somoano, Vice President of Asset Planning Inc., is a Certified Financial Planner, CFP^®, and is responsible for portfolio and financial plan analysis. Before Carol joined API, Inc in 2005 she worked as a management accountant for 15 years before deciding to concentrate on financial planning. Carol obtained her B.S. in accounting from Cal Poly Pomona and her MBA from Cal State Fullerton. She completed the UCI Financial Planning program and passed the CFP exam in March of 2004. She is also a Notary Public and Realtor^®.

She is an active member of the Orange County Financial Planning Association and has participated in the OC Register Annual Financial Planning Hotline. She is an active volunteer in her community and has received an Honorary and Continuing Service Award from the California State Legislature in 2003 and 2007.

Carol’s core values are client-focused, emphasizing long-term relationships built on confidence and trust. She works diligently to increase her client’s net worth, plan for their future, and ultimately enhance their lives today.

Carol's hourly financial planning rate is $250. Carol's portfolio management fee is a maximum of 1% and is discounted for portfolios over $250,000.

PH: 714-827-5794 | Email Carol

Asset Planning, Inc Blog

Social Security Tax Break

About the author

Carol Somoano, MBA, CFP®

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