Got an S.S. question, please?

[smstonypoint]

Thank you. Your response about working and what SS calls recomputations is correct FOR YOU . It rarely applies to regular people who weren't old school Federal employees who worked under a retirement system where Social Security taxes could not be withheld. (Don't worry taxpayers. I cannot collect SS since I didn't work enough under SS to collect.)
For 99% of the people the age for no work penalties is now age 66. The problem I would run into is was that someone else would read what you wrote, take it as gospel, and wonder why the government felt the need to screw him by not giving a big increase for little work. Most everybody's case is just a little bit different and slightly different rules are appropriate.

Am I correct in remembering that SS benefits aren't subject to federal income taxation for any level of earned income at age 70 and beyond?

Steve

 

[B7510HSD]

No. Pension income is exempt.

Thank You!

 

[Travelover]

Am I correct in remembering that SS benefits aren't subject to federal income taxation for any level of earned income at age 70 and beyond?

Steve

Your SS benefits are taxed on a sliding scale form zero to 85% depending on your total income from all sources. Taxes are not based on age. After age 70, your SS benefits do not continue to increase if you have not taken SS yet, so there is no sense in waiting past 70 to begin SS.

 

[California]

...You can keep adding to your SS annuity every year you have minimum earnings per SS up to age 70. They re-compute it every year based on 1040 or SS with holding info. I did that as a civil service annuitant with minimum paid into SS. Raised SS annuity from $600+ to over $1500 plus a month. Wiped out the less than 35 years in the equation which is a real hit when you have averaging of 35 highest years with a bunch of zeros.

Dad did that. He didn't have the 40 quarters paying into SS to qualify for benefits. He retired as a schoolteacher (CALSTRS pension system), and previously was a state government worker back when they didn't pay into SS. His only SS quarters were long ago as a youth.

So several years before retirement he took advantage of a program that let him pay in retroactively the amount (plus interest) that would have been deducted for SS. He also set up detailed orchard bookkeeping to keep track of his hours and costs, and started paying into SS as self-employed based on the farm income. He eventually made the 40 quarters he needed to qualify for SS.

Similar: a local HS Econ teacher worked summers as a grocery bagger to make the final quarters he needed.

With small pension checks from all three systems Dad had paid into - teacher, state, SS, he had a decent retirement.

 

[California]

My own strategy after taking early retirement, was live on the IRA money I had paid in years before (before kids!) and wait to age 66 before starting SS. Also my wife claimed her spousal benefit from me when I filed, and deferred her own SS until age 70. I had planned this out to provide a level income starting from my retirement date. - And also considering the minimum monthly draw-down required from IRA's as each of us reached age 70.

This has worked out as planned. Approximately level retirement income, and our savings remain equal to the balance when we started retirement.

Advice to those younger: It is well worth it to pay a consultant to work out a retirement plan like this years in advance. For me, I started detailed planning when I bought the QuickBooks retirement planning CD long ago to bring some focus onto haphazard IRA and savings accounts I had established. A pro consultant, or retirement planning tools that calculate the future effect of compound interest, will be essential to understand where you will be 20 years later.

 

[gwstang]

"The down side of taking the reduced retirement at 62. At 65 you can make all you want."

Could someone explain what the reasoning is behind this?

 

[gwstang]

Did the Welfare Queens give you much trouble. There were several when I went to the local SS office about two months ago and they sure got loud and fussy about wanting "Their Benefits" for their kids.

And No!!! I do not think being fat, over 400+ lbs is a reason to get SS Benefits. Lard Asses need to get a job with lots of physical labor....lol There was one in there that had to be 600+ You should have heard that poor chair groan when she plopped down on it...aiiihyyyeeee....I was waiting to exhale before I was sure it would stand the weight. :ashamed:

 

[Tractor Seabee]

"The down side of taking the reduced retirement at 62. At 65 you can make all you want."

Could someone explain what the reasoning is behind this?

If anybody can explain the reasoning behind government actions they are a wizard. There is probably some actuarial smoke and mirrors that that relies more on psychology than real economics. Remember that those policies are not necessarily what congress had behind the law. The non-elected bureaucrats put all that fine print in there.

The best reason I can think of to take the 62 option is if your health is such that your prospects of reaching 70 are slim to nothing. Everything in life is a gamble so shake the dice good. In my case I liked the work I was doing, I come from a family of long livers, and my health prospects were excellent. I looked at all the angles early in the retirement planning starting at about age 45. I now have 6 retirement annuities (4 are indexed to inflation) paying off with a 6 figure + income, money in the bank, and good equity in my home. 82 and still collecting and living it up. If you wait till your 60s to start planning your are way behind the power curve on the magic of compound interest. Don't wait for the SS surprises till 62.

Ron

 

[gwstang]

I forgot to add that I did set my state retirement benefits up where I get about $300 less a month, but my wife will continue to get the same amount if/when I kick off. Of course she will get my SS when I am gone as hers is considerable less than mine. Least I could do after her "Putting" up with me for 41 years....lol.

I told her quite a while back that it was my honor to serve and protect her all the days of my life...right up to the end.

PS...she still likes to ride in my '66 mustang. Pretty red head and a mustang...what more could a fellow ask for.

Not too bad for an old woman at 62....(and an old car at 52...)

 

[gwstang]

" I now have 6 retirement annuities (4 are indexed to inflation) paying off with a 6 figure + income, money in the bank, and good equity in my home. 82 and still collecting and living it up."

Wow, you are very well set and very very smart with your investments. I do think too many wait too long and just try to "get by" over the years. I have known a few people that had a big house/corvettes in the driveway and could not rub two nickles together. One of my favorite stories that goes the other way is about the old farmer that went to buy a new truck and because he was in overalls/worn boots and unshaven....no one wanted to help me. They didn't think he had any money. Finally one of the guys went out to help him and he pointed and said that one, at a truck. Sales guy, sort of embarrassingly, asked him how he wants to pay for it. He pulls a roll of hundreds out that would choke a horse and says, This! Shows you never know who the guy is that dresses a little shabbily and runs a big operation.