Ask Terry Questions Selling Savings Bonds to help Granddaughter

Selling Savings Bonds to help Granddaughter

By Terry Savage on December 08, 2013 | Financial Planning / Retirement

Hi Terry,
I am trying to figure out my income tax for 2013.
I am an elderly widow, have combined income from Soc. Sec., pensions, RMD from IRA
of approx. $ 36,156. for the year.
I do know that the tax bracket to stay uner the 15% bracket is $ 36, 250.
I was hoping to cash a couple of older EE bonds, each accumualted $ assist my grand daughter , lost her job after 8 yrs.
I’m thinking that I cannot do this, am I correct ?
Do you have any other suggestions, advice for any alternate way to get to this money without any penalties, etc. ?
So thankful for you sharing your wisdom to those of us in need of this help.

Terry Says: If you’re filing separately, the15% tax bracket ends at $36,250 — and (even adjusted for deductions) you do want to stay in that low bracket.  Cashing in older EE bonds this year would move your last income into a higher tax bracket.

BUT that is not the real issue here.  I don’t think you want to cash those bonds in because all older EE bonds carry a higher “floor” rate of interest than you could earn now.  They are thus more valuable —  assuming they haven’t matured and are still paying interest.  So if you have to cash these bonds to help your granddaughter, it also means that you don’t have a lot of other extra “cash” — and it scares me to see older women who don’t have adequate resources for whatever issues may come along.  Your granddaughter will get along.  She has unemployment compensation — and she has youth and flexibility on her side. I’m sure you love her and she loves you, but I doubt that she will come to your financial rescue in the future if you rescue her now!  So let her fend for herself — and leave any extra month to her (and your other family members) after your passing.  You never know when you will need your money!

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