VeriPlan’s comprehensive and integrated retirement planning software helps you to plan your retirement much more easily. VeriPlan’s retirement planning calculator tools automate the lifetime financial planning process for your retirement income, retirement pensions, retirement annuities, Social Security payments, retirement expense budget, retirement taxes, and tax-advantaged retirement plans.

VeriPlan’s integrated retirement planning tools enable you to set and adjust your intended retirement ages. You can vary the planned retirement ages of either earner and plan to retire simultaneously or in separate years, when each earner reaches his or her planned retirement age. The VeriPlan retirement income calculator also supports user-adjustable real dollar income assumptions for persons who choose to continue to work beyond the normal retirement age.

Automated tax-advantaged retirement account projections

VeriPlan has automated the development of your lifetime projections by incorporating current tax laws and rules associated with tax-advantaged retirement investment incentive programs such as traditional IRA, Roth, 401k, 403b, SEP, Keogh, and other retirement plans. While simultaneously providing powerful “what-if” user retirement planning controls, the VeriPlan’s IRA retirement calculator and 401k retirement calculator functionality hides the complexity of the tax laws that are associated with these various personal retirement plans and employer-sponsored retirement plans.

For example, the VeriPlan IRA retirement calculator has fully automated the projection of your IRA contributions, deductions, asset growth, withdrawals, and taxes, regarding both traditional IRA accounts and Roth IRA accounts. VeriPlan also automatically projects required minimum distributions from traditional tax-advantaged accounts after age 70 and 1/2. If your projections indicate that you would need to take early withdrawals before age 59 and 1/2, the VeriPlan early retirement calculator automatically projects and extracts both ordinary income taxes and any federal and state early withdrawal penalties due, net of your tax basis is these accounts.

This is a sample of the VeriPlan lifetime retirement calculator graphic that shows projected balances in taxable investment accounts, traditional tax-advantaged retirement accounts, and Roth retirement accounts. This graphic, as well as all the others, is automatically developed for every lifetime planning scenario that you develop with VeriPlan:

Retirement pension and annuity projections

VeriPlan’s integrated retirement calculator with pension and retirement annuity calculator features will automatically track up to 10 pensions and annuities for you and your spouse across your lives. VeriPlan automatically projects for you the duration of your pension payments and annuity payments, whether your payments begin at you projected retirement date or a different age.

VeriPlan’s retirement annuity calculator and retirement pension calculator features automatically project taxes on your pension and annuity payments by integrating them into VeriPlan’s extensive federal, state, and local income tax projection functionality. Furthermore, the VeriPlan retirement spending calculator allows you to vary the purchasing power of your expected pension and annuity assets and payments relative to inflation both before and after payments begin.

VeriPlan’s comprehensive personal financial planning software automates the analysis of your retirement savings and Social Security income

With the VeriPlan retirement withdrawal calculator, you can adjust your expected ordinary living expense budget in retirement and set the growth rate of your retirement budgeting expenses. You can use VeriPlan’s Expense and Savings Tool to model additional retirement expenses that you might anticipate on a year-by-year basis. You can grow your budget for additional retirement expenses at rates that are below, above, or equal to expected rate of inflation. Furthermore, the integrated VeriPlan retirement investment calculator automatically projects your required annual lifetime investment portfolio asset withdrawal rates for you.

Concerning your Social Security retirement payments, with VeriPlan’s integrated Social Security retirement calculator, you can set current levels for those entitlements. You can adjust the age at which you would begin to receive Social Security payments, which could differ from the age that you actually stop working. Furthermore, VeriPlan allows you to scale back your Social Security payment expectations, given the significant uncertainty that surrounds the funding viability of the U.S. Social Security system.

Note: We mail your VeriPlan retirement tools CD on the next business day after PayPal has notified us of your order. When your order ships, we will send a shipment notification email to you using the email address supplied by PayPal. VeriPlan is shipped via the USPS, and deliveries typically take 3 to 10 days to arrive.

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To develop your investment growth projections, VeriPlan’s stock investment calculator software allows you can enter as many as 99 separate stock and equity asset holdings. For each of your current stock and equity holdings, you can also enter your investment portfolio costs and your tax basis. In addition, you can indicate whether you hold a particular stock or equity asset 1) in a taxable investment account; 2) in a traditional IRA, 401k, 403b, 457, or other traditional retirement plan investment account; or 3) in a Roth IRA or designated Roth 401k, 403b, or 457 account.

Internally, the VeriPlan compound investment calculator maintains separate information for each of your individual asset accounts throughout your lifetime projections. The VeriPlan financial investment calculator automatically projects your overall portfolio tax efficiency and investment efficiency for each year of your lifetime projection.

VeriPlan’s investment calculator software does this even though the net values of your individual asset holdings may change at different rates due to differences in investment returns, costs, and taxes. By avoiding the use of arbitrary averages across groups of investors, the VeriPlan mutual fund investment calculator can provide you with much deeper insight into your projected personal finance and retirement planning circumstances.

This is a VeriPlan future value investment calculator graphic with a decreasing allocation to equity or stock investments as the user ages:

The VeriPlan long term investment calculator software automatically rebalances your stock and equity assets annually over your lifetime

Using the information that you provide about your current cash, bond, and stock asset holdings, the VeriPlan hypothetical investment calculator automatically measures the annual net worth, return on investment, investment cost, and tax characteristics of your current financial asset portfolio. Next, it performs a cash flow analysis and projection of your year-by-year positive and/or negative net income from your earned income and your other non-asset income sources, after your annual living expenses would be paid. Then, the VeriPlan investment calculator spreadsheet automatically projects your overall net annual investment portfolio returns and asset portfolio values according to the particular asset allocation method that you have chosen from among the five that are provided by VeriPlan’s asset allocation calculator tool.

Simultaneously, the VeriPlan retirement planning calculator will automatically take into account and report on your capital gains tax obligations and investment costs. Your VeriPlan compounding investment calculator projections always maintain a separation between your taxable accounts, your traditional IRA, 401k and other traditional retirement investment accounts, and your Roth IRA and Roth 401k accounts.

Taxes on your projected asset returns and withdrawals are applied differently, depending upon the current rules for each type of retirement plan account. Your current investment costs allow VeriPlan to measure the cost efficiency of your financial asset portfolio related to the five major types of investment costs. VeriPlan’s cost efficiency measurements are weight-adjusted by the value of the assets that you hold in each of your cash, bond, and stock asset accounts across you lifetime.

Note: We mail your VeriPlan home investment calculator CD on the next business day after PayPal has notified us of your order. When your order ships, we will send a shipment notification email to you using the email address supplied by PayPal. VeriPlan is shipped via the USPS, and deliveries typically take 3 to 10 days to arrive.

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The VeriPlan retirement planning calculator automatically projects your lifetime U.S. federal, state, and local taxes

With its fully integrated lifetime retirement tax calculator and income tax estimator features, the VeriPlan personal finance software automatically projects your lifetime tax obligations in eight different tax categories. VeriPlan automatically projects your financial plan using the particular federal taxes, state taxes, and local income tax rates and limitations that currently apply to you. It also projects your income tax exemptions, tax adjustments, and tax deductions plus your property taxes and other taxes. To prevent obsolescence, the VeriPlan home retirement planning software allows you to change the tax rates and limits that its tax calculator uses, in case tax laws change in the future.

Federal Income Tax Rates and Limits:

VeriPlan’s retirement planning software automatically applies current variable U.S. federal ordinary income tax rates and limits.

State Income Tax Rates and Limits:

VeriPlan retirement tax calculator functionality automatically applies your state’s current variable or flat ordinary income tax rates and limits. VeriPlan provides income tax rates for the 50 U.S. states and Washington, D.C., and you can select any one of them.

Local Income Tax Rates and Limits:

The VeriPlan tax calculator functionality automatically applies any local ordinary income tax rates and limits that you supply. It can project a) no taxes, b) flat tax rates, c) variable tax rates, or d) New York City income tax rates, which are provided.

Taxable Income Differences:

States and localities may adjust your federal taxable income. VeriPlan can automatically develop projections that use different levels of taxable income at the federal, state, and local levels.

Income Tax Filing Status:

The VeriPlan retirement planning tool supports the ‘Single’ federal income filing status and the “Married, Filing Jointly’ filing status, and it automatically applies the tax rates and limits that are associated with these filing statuses.

Income Tax Exemptions:

VeriPlan’s financial planning calculators automatically project annual tax exemptions and their phase-outs for up to 10 dependents.

Income Tax Adjustments:

VeriPlan automatically projects annual tax exemptions for up to six different adjustments to your taxable federal income. It also manages differential growth rates and phase-outs.

Income Tax Deductions:

The VeriPlan retirement tax calculator automatically projects your multi-year federal income tax deductions. In each projection year, VeriPlan automatically applies the more favorable of either the standard deduction or your itemized deductions.

Social Security and Medicare Taxes:

The VeriPlan Social Security retirement calculator automatically applies Social Security (FICA) and Medicare taxes. It automatically projects either employee or self-employment tax rates, as appropriate.

Investment Taxes:

The VeriPlan retirement investment calculator automatically applies long-term qualified dividend and capital gains taxes on your capital distributions and asset withdrawals net of your accumulated asset tax basis. For each of your asset holdings, you can provide your current asset tax basis. Across your lifecycle projections, The VeriPlan retirement tax calculator will automatically increase and/or reduce your aggregate tax basis for your cash, bond, and stock asset classes.

Property and Real Estate Taxes:

VeriPlan automatically projects your total property, real estate, and other assessment taxes. You can also project that your property taxes will grow at a rate different from inflation.

Your Tax-advantaged Retirement Plans:

To the extent possible, the VeriPlan IRA retirement calculator and 401k retirement calculator has automated your lifetime projections regarding the various employer retirement plans and personal retirement accounts that allow you to defer taxation or to avoid future taxation altogether. The VeriPlan retirement tax calculator automatically projects separate values for your taxable accounts, traditional ‘tax-deferred’ accounts, and Roth retirement accounts. VeriPlan has fully automated the projection of your IRA contributions, deductions, asset growth, withdrawals, and taxation for both traditional tax-deferred IRA accounts and Roth IRA accounts. When necessary, the VeriPlan retirement tax calculators automatically assess federal early withdrawal penalties, which are supplied by VeriPlan, and any state early withdrawal penalty that you enter.

An example of VeriPlan’s lifetime tax payments projection graphic:

This is an example of the projected lifetime annual tax payments graphic that is automatically developed for you by the highly sophisticated VeriPlan financial planning retirement software:

Note: We mail your VeriPlan retirement planning software CD on the next business day after PayPal has notified us of your order. When your order ships, we will send a shipment notification email to you using the email address supplied by PayPal. VeriPlan is shipped via the USPS, and deliveries typically take 3 to 10 days to arrive.

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Some investors hold municipal bonds in an attempt to reduce their tax burden. This article discusses the relationships between tax-exempt municipal bonds, marginal tax rates, and investment asset tax location.

An investor’s marginal tax rate is important, when making tax-related investment portfolio decisions. By combining your federal, state, and local marginal income tax rates, you can value the “tax shield” that you obtain from an incremental dollar of non-taxable bond investment income versus and incremental dollar of taxable bond income. The higher the combined marginal income tax rate, the higher the potential benefit from investments that yield non-taxable income.

Using state and federal marginal income tax rates, here are two examples with married couples filing joint tax returns who are California residents:

• Example A — “Couple A” has $100,000 in taxable income after deductions and exemptions, which would put them into the 25% federal marginal income tax bracket and into the 9.55% state marginal income tax bracket, for a combined marginal income tax rate of 34.55%.
• Example A — “Couple B” has $250,000 in taxable income after deductions and exemptions, which would put them into the 33% federal marginal income tax bracket and into the 10.55% state marginal income tax bracket, for a combined marginal income tax rate of 43.55%.

For an extra dollar of taxable income, Couple A would pay 34.55 cents in state and federal income taxes, while Couple B would pay 43.55 cents.

Both could avoid these taxes on an extra dollar of income, if they held a tax-exempt bond investment that was not taxed at both the federal and state income tax levels. California municipal bonds could shield them from these taxes and provide such savings. However, the question is whether the tax savings would be sufficient for one or both of these couples to warrant choosing tax exempt municipal bonds versus an alternative investment in taxable government or corporate fixed income bonds.

Because of investor bidding in real-time credit markets, the markets set differential investment yields on taxable versus tax-exempt assets.

The spread between these yields is influenced by bond investor supply and demand on an after-tax basis. Investors in higher marginal tax brackets have a greater incentive to own tax-exempt bonds. Those who benefit the most from tax avoidance tend to gravitate toward tax-exempt bonds and the opposite is true for those who do not.

To compare after-tax yields on taxable and tax-exempt investments, multiply the percentage yield on the taxable bond by one minus the marginal tax rate expressed as a decimal. Then, compare this result with the market yield on the tax-exempt bond. (Obviously, this comparison presumes that otherwise these taxable and tax-exempt bonds have similar maturities, likelihoods of default, and other provisions and characteristics.)

• Assuming a taxable bond yield of 7%, Couple A with the combined marginal tax rate of 34.55%, would require that an equivalent tax-exempt bond would yield at least 4.5815% for the tax-exempt bond to be more desirable on an after-tax basis. [(7.0% times (1.0 minus .3455) = 4.5815%)]
• Assuming a taxable bond yield of 7%, Couple B with the combined marginal tax rate of 42.3%, would require that an equivalent tax-exempt bond would yield at least 3.9515% for the tax-exempt bond to be more desirable on an after-tax basis. [(7.0% times (1.0 minus .4355) = 3.9515%)]

Clearly, the investor with the highest combined marginal tax rate has a stronger preference for holding tax-exempt municipal bonds. Investors in the highest total federal and state marginal income tax rate brackets get the most benefit, because the after-tax value to them could exceed significantly the actual market yield spread between taxable and tax-exempt bonds.

The lower one’s marginal income tax rates, then the lower ones potential tax shield benefit. At some point, municipal bond yields become disadvantageous for those who have lower marginal income tax rates, when compared to owning taxable fixed income investments. Whether or not to invest in a municipal bond versus taxable bond, of course, depends upon a variety of factors. These include one’s marginal tax rate, the spread at the time, the tax status of the account holding the asset, the concern for potential default, the duration, etc.

This analysis also demonstrates why municipal bonds should never be held in a tax-advantaged retirement account.

With a tax-advantaged retirement account, the current marginal tax rate on both taxable and tax-exempt bonds would be zero. Tax driven bond market supply and demand forces taxable yields upward or tax-exempt yields downward – whichever might be your perspective. Therefore, only taxable bonds should be held in tax-advantaged retirement accounts because of taxable bond yields would tend to be higher than tax-exempt yields on otherwise equivalent bonds.

There is a “sweet spot” for certain investors to hold municipal bonds

Given the factors discussed here regarding marginal income tax rates, bond market taxable versus tax-exempt yield spreads, and the optimal “tax location” decision, there is a “sweet spot” for certain investors to hold municipal bonds. Those who are more likely to benefit from municipal bonds have the following characteristics.

These investors tend to have an asset allocation that more heavily skewed toward bonds, and they tend to have far more assets in taxable rather than tax-advantaged accounts. Furthermore, they have relatively high current earned income. Investors with this profile, “fill up” their tax-advantaged accounts with taxable bonds. Next, their heavy allocation to fixed income assets then “spills over” into their taxable accounts. In this circumstance, their very high marginal income tax rates might make owning tax-exempt municipal bonds a more advantageous proposition. Nevertheless, an analysis should always be performed using current bond market yields and total marginal tax rates to confirm that tax-exempt municipal bond investments would be more advantageous, when these more tax-conscious investors file taxes in the spring related to the previous tax year.

Note that “tax location” is the tax optimization of one’s personal investment portfolio between taxable and tax-advantaged accounts, which include traditional and Roth tax-advantaged IRAs and defined contribution employer-sponsored retirement plans, such as 401k, 403b, 457, Simple, Keogh, and other retirement accounts. When you do tax location optimization, you do not simply apply the overall asset allocation percentages of your total investment portfolio to your taxable and tax-advantaged accounts.

Instead your taxable and tax-advantaged accounts hold different types of assets, which will achieve your overall asset allocation strategy targets when combined. With asset tax location optimization, you consciously invest certain assets in taxable versus tax-advantaged accounts to benefit from the differential tax characteristics of the major types of financial asset holdings, including cash, bond, and stocks. To better understand the tax issues related to asset allocation, investment asset tax location, and emergency cash management, go to: Asset Allocation Strategies.

Incidentally, you should pay attention to the asset tax location characteristics of your overall investment portfolio first, before you attempt to decide whether or not municipal bonds make sense in your particular situation. For example, if you have “room” in your tax-advantaged accounts for your total allocation to bonds, then this would obviate the need to even consider holding municipal bonds for your taxable accounts. You would invest in generally higher yielding bonds to be held in your tax-advantaged accounts instead. You can do some of this analysis on paper, but to develop a lifetime financial plan, you should use an automated retirement planning software tool that provides IRA retirement calculator, 401k retirement calculator, and other retirement tax calculator functions.

You need financial planning software with sophisticated income tax projection features to make a durable plan for your financial success

This retirement asset allocation calculator web site publishes documents on how to establish a self-directed personal finance plan

The family financial plan articles on this free web site provide important ideas to households about family financial plan topics that they should take into consideration. These articles help in making a life time personal finance planning strategy. Furthermore, to produce a fully comprehensive long-term money management strategy depends upon you using the leading retirement planning tool with an excellent early retirement calculator and the leading retirement planning software tools.

Furthermore, our free achieve financial freedom website enables you to find a first-rate all-in-one retirement planning worksheet home retirement calculator with the best retirement planning software, first-rate personal finance budgeting software, and the leading retirement plan calculator software for your self-directed lifelong financial planning.

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There are trade-offs when deciding whether to allocate contributions to Roth retirement savings accounts versus traditional retirement savings accounts that have deferred income taxation features. In the majority of personal finance situations, making 100% of allowable contributions to Roth retirement plans would probably not yield the greatest total wealth in retirement compared to making contributions to traditional retirement savings accounts — even after income taxes on distributions from traditional retirement accounts during retirement are considered.

When the lifetime net present value of Roth contributions is compared to the lifetime value of making currently tax deductible contributions into traditional IRA and employer sponsored defined contribution retirement plans, such as 401k, 403b, KEOGH, and other plan accounts, most often traditional retirement accounts yield higher lifetime wealth net of taxes versus Roth accounts. Reducing current taxation with traditional accounts is usually a better bet than eliminating future taxation with Roth accounts.

However, a Roth retirement account contribution strategy also provides estate planning benefits that traditional tax-advantaged retirement accounts do not. Sometimes these estate planning benefits can tip the balance toward making Roth account contributions. When you expand your total present value analysis to include the long-term value to a multi-generational family, then Roth assets can have significantly greater value for some people.

If Roth assets remain at death, there are very significant long-term multi-generational tax avoidance advantages. In such circumstances where it is likely that a person’s assets will be adequate to cover retirement expenses even with a very long life, then it can be advantageous first to live off of traditional retirement plan assets, which are subject to mandatory withdrawals and associated income taxation in retirement anyway. This means that over one’s lifespan, when retirement assets are adequate for the long-term, then a larger and increasing proportion of one’s future financial asset portfolio would consist of Roth assets.

Why Roth retirement accounts can have some very significant advantages over traditional tax-advantaged retirement accounts for estate planning purposes

If a family’s financial model indicates that there is a strong possibility that they will still have tax-advantaged account assets at death, then those assets should be Roth tax-advantaged account assets, where feasible. Roth assets can be inherited by children, for example, and those inherited Roth assets can also grow tax-free over the expected lifespan of the person inheriting the Roth account. Heirs have certain mandatory withdrawal requirements related to their expected lifespans, but those withdrawals do not trigger income taxation on any Roth account asset appreciation either during the life of their benefactor or during their life as the heir.

For example, this means that the middle-aged offspring inheriting Roth retirement account assets from an elderly senior citizen parent when that child is age 50 perhaps, could enjoy possibly another 40 years of tax-free Roth inherited account investment growth with an income stream along the way. Under US tax law, this middle aged child would be required to make mandatory annual withdrawals related to his or her life expectancy. Nevertheless, these inherited Roth account withdrawals would be non-taxable including any asset appreciation that may have occurred during the life of the parent or the life of the child.

Only when these withdrawn inherited Roth account assets have been reinvested into a taxable account AND those reinvested and now potentially taxable assets have later appreciated in that taxable account, would only this subsequent asset appreciation potentially be subject to either short-term capital gains taxes or to long-term capital gains taxes. Depending upon the tax-efficiency of subsequent investments within this taxable account, recognition of taxes on asset appreciation could be deferred for a very long time.

Therefore, if you are among the minority of US citizens who can reasonably expect to exit this life with substantial tax-advantaged account assets, then let them be Roth account assets, if possible. Inherited traditional tax-advantaged retirement accounts do not provide these very significant and valuable estate planning tax avoidance benefits provided by inherited Roth accounts.

The only thing one needs to overcome is the current payment of higher income taxes on Roth account contributions or traditional retirement account conversions to Roth accounts. You need to possess available cash to pay the taxes, and to have the confidence that your future asset accumulation will be substantial enough to justify paying more taxes now for even greater tax savings in the future on a net present value basis. And, your kids could be quite happy with what your leave behind for them in the form of inherited Roth accounts.

Roth retirement plan account rules are in flux

Prior to 2010, total income restrictions limited Roth account contributions to those of low to moderate earned income. This changed in 2010 as all income restrictions on Roth account contributions and Roth account conversions were eliminated. Whether income limits on Roth account contributions will be re-instituted in the future is obviously unknowable currently. But in the interim, those who want to make Roth contributions and do Roth conversions have a potential opportunity to improve their long-term wealth.

You should use a capable retirement investment calculator to better understand the potential size of your projected Roth retirement nest egg assets in the future and the trade-offs between Roth and traditional account contributions. You should find out whether you could be one of the minority of the US taxpaying population that could amass significant enough retirement assets to have a preference of holding Roth retirement account assets rather than traditional retirement plan assets. Do not just guess, because too much money is involved in the decision.

Incidentally, to figure out whether you are one of the minority with a reasonable chance of building substantial retirement assets, you need sophisticated home retirement planning software that can help you to figure this out for your particular financial situation and circumstances. We can help, because we offer the bargain-priced VeriPlan lifetime retirement planning tool spreadsheet application that makes figuring this out for you family straightforward. To learn more, just explore the various pull-down menus that you will find on the blue menu bar near the top of this page.

This retirement planning spreadsheet software fully automates Roth account versus traditional tax-advantaged account retirement planning calculator analysis capabilities. It provides integrated Roth IRA retirement calculator, 401k retirement calculator, and other retirement plan calculator projection capabilities that take into account your particular current and projected lifetime financial planning situation. You can use VeriPlan’s flexible retirement planning tools to evaluate the net lifetime value to your family of choosing any combination of allowable Roth and/or traditional retirement account contributions over your lifetime. These retirement tax calculator features are just a few parts of VeriPlan’s rich set of lifetime financial planning and retirement planning software capabilities.

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Note: We mail your VeriPlan lifetime financial planning and retirement calculators CD the next business day after PayPal has notified us of your order. When your order ships, we also send an email to you. VeriPlan shipments via USPS typically take 3 to 10 days to arrive.

Roth IRA calculator tools are needed to devise an optimum lifetime financial plan

This free retirement planning calculator website publishes documents regarding how to develop a customized family financial planning strategy

The personal financial planning strategy postings on this free website give individuals and families important ideas about lifetime financial planning issues. Our publications help to clarify important topics associated with establishing better personal finance practices. In addition, to analyze your retirement planning alternatives, you should use the best retirement calculator tool with superior retirement investment projection capabilities. You can find that retirement calculator right here. Its name is VeriPlan. VeriPlan is an excellent all-in-one financial planning tool with early retirement calculator analysis capabilities and the best retirement investment software features available for your do-it-yourself lifetime financial planning needs.

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