Gilbert Wealth Articles

The Tax Torpedo: How It Works and How to Avoid It

Many retirees are surprised to find themselves paying more taxes than expected in retirement—especially on their Social Security benefits. One major culprit is the so-called “Tax Torpedo”, a term used to describe the sudden and steep marginal tax rate increase that occurs as Social Security benefits become taxable.  What is the Tax Torpedo? The Tax Torpedo refers to the sharp rise in marginal tax rates that can occur when a retiree's income crosses certain thresholds, causing more of their Social Security benefits to become taxable. This can lead to an effective marginal tax rate far higher than their nominal tax…
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Account vs. Investment: Understanding the Distinction in Your Financial Plan

When managing your finances, terms like account and investment are often used interchangeably—but they serve very different purposes. Understanding the distinction is essential for making informed decisions about saving, growing, and protecting your money. What is an Account? An account is a container or structure where your money is held. It provides a framework that determines:How your money is taxedHow easily you can access itWho can own or inherit itWhat rules apply to contributions and withdrawalsThere are many types of accounts. From a basic checking account at your bank, retirement accounts like a 401k or Roth IRA, to more complex…
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Understanding Your Medicare Options in Retirement: Original Medicare, Advantage, and Medigap Explained

In planning for retirement, Medicare is a foundational part of your healthcare planning in retirement. But "Medicare" isn't just one plan—it's a set of options, each with different rules, coverage levels, and costs. Understanding the main paths—Original Medicare, Medicare Advantage, and Medigap—can help you make a confident, informed decision about your healthcare coverage as you age. Basic Medicare Terminology When beginning to learn about your options, you'll quickly come across the terms Parts and Plans. Here is what you need to know. Parts are sections of the original Medicare that provide different types of coverage. Currently, there are four parts: Part…
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Funeral Insurance: What It Is, How It Works, and Who Might Need It

Planning for end-of-life expenses isn’t a topic many people enjoy thinking about, but it can be a final act of care for loved ones. Funeral insurance—also known as burial insurance or final expense insurance—is a tool designed to ease the financial burden of your funeral and related costs. What Is Funeral Insurance? Funeral insurance is a type of life insurance policy designed to cover the costs associated with end-of-life expenses, such as:Funeral and burial or cremation costsFuneral home servicesCasket or urn expensesHeadstone or grave markerFlowers, programs, and other memorial itemsTravel or lodging expenses for family (in some policies)Unpaid medical or…
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Medicare and Travel: How Your Coverage Works When You’re Away from Home

Retirement often brings the freedom to travel—whether that means visiting grandkids across the country, spending winters in a warmer state, or exploring the streets of Paris. But many retirees are surprised to learn that not all Medicare plans travel well.Understanding the difference between routine care and emergency care, and how various Medicare options handle each while you're away from home, can help you avoid unexpected bills and headaches.This guide is for travelers who live primarily in the U.S. but may spend extended time elsewhere—think snowbirds, road trippers, or international vacationers.We’ll walk through what to expect with Original Medicare, Medicare Advantage,…
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Required Minimum Distributions (RMDs): What You Need to Know

When it comes to retirement, one of the most important—but often surprising to learn—rules is the Required Minimum Distribution (RMD). RMDs are mandatory withdrawals from certain retirement accounts that begin after a specific age. Failing to take RMDs on time can result in tax penalties, so it’s important to understand how they work and how to plan for them. What Is an RMD? A Required Minimum Distribution is the minimum amount you must withdraw annually from your tax-deferred retirement accounts once you reach a certain age. These withdrawals are mandated by the IRS to ensure that retirement savings eventually become…
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Should You Pay Off Your Mortgage Before Retirement?

Should I pay off my mortgage before I retire, or is it okay to carry a mortgage into retirement?This is a hotly debated question in retirement.The truth is, there isn’t a one-size-fits-all answer. Plenty of retirees live comfortably while still making mortgage payments, while others sleep better knowing their home is fully paid off. What matters most is understanding how your mortgage fits into your overall retirement plan. What A Paid Off Home Looks Like For many, the emotional and psychological benefits of owning their home outright are hard to beat. Making that last mortgage payment is incredibly satisfying. When…
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What Is Your Full Retirement Age (FRA)?

When it comes to claiming Social Security retirement benefits, one of the most important terms to understand is Full Retirement Age—commonly referred to as FRA. Your FRA is a specific milestone that plays a central role in how much you receive from Social Security over your lifetime.  What is Full Retirement Age (FRA)? Your Full Retirement Age is the age at which you are eligible to receive your full, unreduced Social Security retirement benefit (also known as Primary Insurance Amount or PIA), as calculated by your earnings history.It is not the age at which you are required to retire, but…
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Understanding the Social Security Earnings Test

For those planning to claim Social Security retirement benefits before reaching full retirement age (FRA), the Social Security Earnings Test can be a critical — and sometimes confusing — part of the picture. While claiming early gives you access to monthly income, earning too much from work may reduce your benefits temporarily. However, these withheld benefits are not lost — they’re factored back into your future benefit amount.If you're after your Full Retirement Age, earn all you want. It won't affect your benefit amount. Taxes - yes. Benefits - no.Here’s what you need to know. What Is the Social Security…
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Understanding the Different Adjustments to Social Security Benefits

Social Security benefits are not static. They’re designed to adjust over time to reflect changes in a variety of situations. While many people are familiar with annual Cost-of-Living Adjustments (COLAs), several other mechanisms can cause your benefits to increase or decrease throughout retirement. Here’s an overview of the primary adjustments that can affect Social Security benefits: Cost-of-Living Adjustment (COLA) COLA is an annual increase in benefits to keep pace with inflation, measured by the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The COLA is calculated in October of each year with the actual increase in benefits occurring in…
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