Video Reports

Embed this video

Copy Code

Link to this video

Get LinkEmbedLicenseRecommend (-)Print
Bookmark and Share

By Christine Benz | 12-13-2012 02:00 PM

Retirement Prepping for the Fiscal Cliff

Financial columnist Gail MarksJarvis lays out planning strategies for taxes, Social Security, Medicare, and more, that retirees and pre-retirees should keep in mind amid U.S. budget uncertainty.

Christine Benz: Hi, I am Christine Benz from To talk about the fiscal cliff hasn't worried the markets too much recently, but investors may still be wondering what it means for their retirements. Joining me to discuss that topic is syndicated columnist Gail MarksJarvis. She is also the author of Saving for Retirement (without living like a pauper or winning the lottery).

Gail, thank you so much for being here.

Gail MarksJarvis: Oh, it's my pleasure. Thanks for having me.

Benz: First of all, congratulations on the second edition of your book.

MarksJarvis: Thank you. It's really an exciting time.

Benz: One topic I'd like to discuss with you, Gail that is top-of-mind with everyone these days is this fiscal cliff. Let's first outline what are the expected tax changes that are part of the so-called fiscal cliff, and how do they intersect with investors' investments?

MarksJarvis: If we go over the fiscal cliff at the end of this year, it means that virtually every taxpayer is going to face higher taxes next year. So, even people at really low incomes, we are talking about people earning maybe $12,000, they are going to go into a higher tax bracket next year. So, whether you are making $12,000 or $12 million, you are going to have higher taxes next year, and it's about $500 billion.

And the real risk there is that if that happens, if people are faced with higher taxes, that means they have less money to spend. And the economy is expected to slow so much that Ben Bernanke, the Federal Reserve chairman, says we'll go into a recession. So, everyone will have higher taxes.

Now, it's possible that Congress will stop this from happening at the end of the year, or they'll let us go over the fiscal cliff. And they'll use the frantic people as they open their paychecks and they say, "Oh no, I have less money. Where did it go?" The politicians then will say, "We'll fix it." And they'll come back at the beginning of the year, and those higher tax rates will go back to the taxes that people are paying now. So, that's the biggest impact. Then, of course, there are impacts for investors, too.

Read Full Transcript
{0}-{1} of {2} Comments
{0}-{1} of {2} Comment
  • This post has been reported.
  • Comment removed for violation of Terms of Use ({0})
    Please create a username to comment on this article