Tag Archives: income tax

Pensions: a nuanced retirement tool (update)

Ahhh, pensions. They can be your ticket to financial freedom. In the best of cases, having a pension is like having a job for the rest of your life without working. In other cases employees view their pensions as silver-bullet solutions to retirement and ignore their financial responsibilities. Sadly many people don’t pay any attention to their pensions or the place a pension holds in their financial future until it’s too late to make a difference. Today I’m going to introduce you to the various types of pensions and how to determine their value. Along the way I’ll touch on some common questions. We have lots to talk about so hang in there!

What is a pension?

A pension is an agreement between the pensioner (beneficiary) and the payer to receive a set amount of money (benefits) on a regular basis, generally following retirement from employment. Typically pension payments will last until the beneficiary dies. In some cases, the beneficiary’s surviving spouse or family will continue to receive benefits, possibly at a different rate.
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Investment types: a net worth and income tax example

Awhile back I introduced a simple rule of growing your net worth: pay or save towards the highest after-tax interest rate first, regardless of what you owe or own.  Today I’ll introduce the investment types with respect to taxes and run some numbers using a rental property as an example.  Each investment type affects your taxes in different ways and what you choose to do with your money should certainly take your taxes into account. Continue reading Investment types: a net worth and income tax example

Net worth and income tax: a rule

After having this conversation no fewer than three times over the past few months, I figured it would be a good idea to clarify a widely-held misconception for landlords holding mortgages and really for anyone whose goal is to put themselves in a better financial situation. I have heard both landlords and others make the unqualified statement that you’ll lower your income taxes if you keep your rental property mortgage for a long time and don’t accelerate the payments on rental properties. While this is true, it’s not necessarily the best way to maximize your net worth and that’s the goal, isn’t it? Even though lowering income tax is a great idea, keeping a mortgage for a long time means we’re just paying money to the bank in the form of interest. To make it worse, the interest we’re paying is often higher than the income tax we would pay if we had no mortgage! Continue reading Net worth and income tax: a rule