All you tractor retirees and investment experts

BB_TX · Apr 10, 2006

Trying to determine how well I can sustain my tractor related activities after retirement. My plan is to retire in just under 2 yrs. I know if you draw SS and work, you are penalized if you make too much in salary. What about income from investments such as 401K, IRAs, CDs, mutual funds, etc.? Are you penalized on your SS income if the investment income exceeds a certain amount?

Humbleto · Apr 10, 2006

I sent you a PM the next time you log in.

froggy · Apr 10, 2006

This is from the IRS website:

6.3 Social Security Income: Regular & Disability Benefits

I retired last year, and started receiving social security payments. Do I have to pay taxes on my social security benefits?

To determine whether any of your benefits are taxable, compare the base amount for your filing status with the total of one half of your social security payments plus all your income from other sources, including tax exempt interest. If you are married and file a joint return, you must combine your incomes and your social security and equivalent tier 1 railroad retirement benefits when figuring the taxable portion of the benefits.

The taxable amount of the benefits is figured on a worksheet in the Form 1040 (PDF) or Form 1040A (PDF) instruction book, or in Publication 915, Social Security and Equivalent Railroad Retirement Benefits. Refer to Tax Topic 423, Social Security and Equivalent Railroad Retirement Benefits, for base amounts, and additional information regarding taxability and reporting requirements.

References:

Publication 915, Social Security and Equivalent Railroad Retirement Benefits
Tax Topic 423, Social Security and Equivalent Railroad Retirement Benefits

scott_vt · Apr 11, 2006

Hi Bill,
Well Im really interested in what you find out! Although I have 5 more years than you to go, making a total of 7. But the way jobs are leaving this country I will be lucky to see that date /forums/images/graemlins/frown.gif

Im hoping between SS and 401K, plus the sale of my primary residence will let me retire to my little place up in the mountains /forums/images/graemlins/grin.gif Time will tell I guess.

scotty

jinman · Apr 11, 2006

Bill, I believe if you are involved in activities not requiring you to pay SSI, you will not be penalized. For example, you've already paid the SSI on your 401K investments. When you withdraw, they are taxable as normal income, but you do not pay SSI. Therefore, there would be no penalty.

The exact formulas for working part-time and SSI I'm not fully aware of. So rather than have a chance of giving bad info, I'll just give none. /forums/images/graemlins/smirk.gif

BB_TX · Apr 11, 2006

I plan to consult a CFP or other professional as I get a little closer. Just trying to start piecing things together now and was not sure how SS was handled. Not sure yet whether to start drawing at 62 or wait. My 401K has grown into a sizeable (at least to me) sum. My wife has an IRA. We have a small amount in mutual funds and a little stock. Plus we have a small business we plan to sell. That sounds like a lot more than it really is, but I think we will be able to retire fairly comfortably without having to worry too much.

KentT · Apr 11, 2006

When I did the math, I would need to live to be 79 in order to NOT lose money by taking the SS retirement at 62 instead of 65.

Simply doesn't make sense not to retire at 62 -- not with the medical history of males in my family....

Do the calculations for yourself, based on the info on the annual projection statement they send you...

scott_vt · Apr 12, 2006

( When I did the math, I would need to live to be 79 in order to NOT lose money by taking the SS retirement at 62 instead of 65.

Simply doesn't make sense not to retire at 62 -- not with the medical history of males in my family....

Do the calculations for yourself, based on the info on the annual projection statement they send you... )

Mornin Kent,
Well my math must not be too bad because I get the same number as you and also agree wholeheartedly /forums/images/graemlins/grin.gif 62 sounds good to me /forums/images/graemlins/grin.gif

scotty

KubotaSteve · Apr 12, 2006

Do your research on CFP's. My dad retired a few years ago and talked to a CFP and they were wanting him to do some crazy stuff. When questioned about it, he used the excuse that it would not put a financial burden on his kids when he left the money to us. That was true, but it would have taken a sizeable portion of his money.
There are some really good CFP's and there are some that are out to help themselves at the expense of your money. It's always easier to gamble with somebody else's money. I would just hate to see someone who has worked hard all their life to retire and then get duped and end up with nothing.
Edit: I remembered looking that up for my dad. I think this is what you are looking for: social security
Good luck

jmc · Apr 12, 2006

Do your research on CFP's. 

A lot of truth there. Some of them may take wild risks but virtually all of them will recommend a plan that involves fat commissions, year after year. My former planner, a CPA, was actually just a salesman in accountant's clothing. Find someone that charges by the hour and does not receive commissions whatsoever. (Some do both, simultaneously)