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The tax thresholds that govern how Social Security benefits are taxed were established in 1983 and have seen minimal adjustment since. Had these thresholds been indexed for inflation, many more retirees would be spared the tax burden they presently face. Originally affecting only 10% of retirees when first enacted, tax liabilities now encompass nearly 50% of those receiving Social Security.
In practice, this means that a couple receiving $36,000 in Social Security while pulling an additional $50,000 from other retirement sources could find themselves subjected to tax on the majority of their benefits, illustrating the importance of strategic retirement planning.