Teacher's wife considers a late start on a retirement plan

Q: I've been a stay-at-home mom now for almost 10 years. While my husband is a public school teacher and has a small pension plan set for his retirement, I have no retirement plan for myself. I am nearing 50 and our monthly budget is fairly fixed. We may have $25 to $50 extra a month that could go to an investment. Is it too late for me to start a plan? What might be a good investment at this point?
- S.U., via e-mail

A: Even though you're off to a late start, William Z. Suplee, a certified financial planner in Paoli, Pa., located west of Philadelphia, believes you can improve your retirement outlook.

By investing $50 monthly over the next 15 years in a balanced, low-cost mutual fund, that money can grow to over $17,000 at an 8 percent rate.

At that time, you could start to take out about 5 percent a year to add to your retirement or look to buy an immediate annuity for a higher payout.

You might check to see if your husband's school pension plan allows more contributions to it and if his employer offers a matching contribution, says Mr. Suplee. That might maximize your benefits more easily.

Q: I am thinking about selling my nonresidential home in Massachusetts. I was wondering if you could tell me how much capital gain tax I would have to pay. I live in New Jersey and am a senior citizen.
A.B., via e-mail

A: The sale of investment real estate can be more complex than most investors realize, says Joseph Halpin, a certified financial planner in West Chester, Pa. There are many taxes to consider - and some surprises to uncover - as you wade through layer upon layer of rules.

Here are some important items Mr. Halpin suggests you keep in mind as you go through the process:

• Capital-gains tax. If you're selling the property for more than you paid for it (and put into it by way of improvements such as a new roof or wiring), you're liable for taxes on the gain. It's a multiple-step calculation, best left to a professional.

Your state of residence and the state where the property is located may also impose a tax on the sale. And be aware that still more rules apply if this is a related-party transaction.

• Depreciation Recapture Tax. This may be assessed depending upon the year in which you purchased the property and what method of depreciation you used. The amount recaptured is taxed at the federal level at 25 percent.

• Alternative Minimum Tax. The United States has two tax systems: One is the regular income-tax system that receives a lot of attention, but the second is the Alternative Minimum Tax system that some people cleverly refer to as the "stealth" tax. If your income reaches certain levels, you must calculate your tax under both systems.

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