Paying taxes now and investing in a Roth could save on taxes later

DEAR BRUCE >> I am 62 years old and recently retired. I will be collecting Social Security benefits from my late husband until at least 66 and likely at 70.

I own my home and also have a decent pension and cash reserves in excess of $100,000. I have lived a frugal life and have pretax accounts of over $1 million. It just fully sank in that if I wait for distributions until 701/2, it will kick me into a significantly higher tax bracket. — V.M. DEAR V.M. >> I think what you meant to say was that you are 62 and you will not be collecting Social Security benefits on your own or from your late husband until you are at least 66 years old, possibly 70. If you don’t need the money, then that is the intelligent route to go because your payments will rise significantly.

If taxes are a major concern, why not pay the taxes now and invest the money in a Roth? That way, you can choose the vehicle the money will be invested in and you’ll not be paying any more taxes. You will get the taxes out of the way at your present age and at a far lower rate.

••• DEAR BRUCE >> My wife and I are struggling to pay our credit card bills every month. My wife lost her job several months ago and unemployment isn’t cutting it.

We would rather focus on paying the cars and utilities bills rather than wasting our money paying credit cards.

Until she gets another job, I am afraid we will have to try and pay the minimum.

The total credit card debt is approximately $45,000. I don’t know what else to do. — Confused DEAR CONFUSED >> I am confused as well! You say you are wasting your time paying credit cards. I think what you’re saying is that you’ll never get them paid and is there another way? The other way is called bankruptcy.

Whether or not you would be approved for Chapter 7 bankruptcy is another matter, but if everything is as you explained it, then I suspect that you would, and it’s probably the way to go.

The best option would be that your wife gets another job that enables you to handle the bills, but if you don’t think that’s likely, then bankruptcy should be considered now. No point putting it off. Send questions to bruce@ brucewilliams.com. Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided. The Bruce Williams Radio Show can now be heard 24/7 via iTunes and at www.taeradio.com. It is also available at www. brucewilliams.com.