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Old 06-05-2014, 04:28 PM
 
Location: Whereever we have our RV parked
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I never thought of this till today, but I was thinking about the tax implications of working and collecting SS after retirement. Then I realized that if you work after retirement, you're actually helping to pay for you're own SS. Here's the example. Let's say you work in a retail store and make 10,000 in a year. So they take 7.5% out of your check for SS and medicare and the employer also has to pay 7.% of your check. That's about $1,500 a year. For a lot of folks that as much or more than the check they get a month from SS. So in essence, you're paying for a month of your own SS payment. Kind of a raw deal if you ask me after all those years of making payments to the govt.
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Old 06-05-2014, 04:44 PM
 
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ss is just another tax and as such never stops anymore then income tax does if you have earned income and go over the threshold.
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Old 06-05-2014, 06:30 PM
 
Location: NC
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The detail you are missing is that over time you will get that money back. The money that you feel you are missing out on is added in to raise/improve your future SS payments. Of course it is spread out over time so it might only be a few dollars a month more. You can check this out on the Soc Sec website.
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Old 06-05-2014, 06:42 PM
 
Location: SW Florida
9,744 posts, read 7,027,781 times
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Quote:
Originally Posted by augiedogie View Post
I never thought of this till today, but I was thinking about the tax implications of working and collecting SS after retirement. Then I realized that if you work after retirement, you're actually helping to pay for you're own SS. Here's the example. Let's say you work in a retail store and make 10,000 in a year. So they take 7.5% out of your check for SS and medicare and the employer also has to pay 7.% of your check. That's about $1,500 a year. For a lot of folks that as much or more than the check they get a month from SS. So in essence, you're paying for a month of your own SS payment. Kind of a raw deal if you ask me after all those years of making payments to the govt.
That seems to be the way it goes- I suppose if you make enough money at that post-retirement job ( so that it could replace one or more of your lesser earning years in that highest 35), you could actually earn a little more in future SS checks if they re-figure your highest 35 yrs with your new earnings.

Or you could be in a situation similar to mine. I retired from my full time job three years ago, and collect a relatively small state pension. I began collecting SS when I turned 65, figuring that there wouldn't be that much difference in my SS check from 65 to the full retirement age of 66, since I wasn't working. My husband, also retired, gets a federal pension and some SS

I also do contract work as an educational consult with a continuing education company- all done at home, computer and internet based. As a contract employee, paid hourly, my employer doesn't deduct taxes, SS or Medicare from those earnings. That's on me, so I have extra taxes taken out of my state pension to cover those taxes, as well as the SS and Medicare which are paid at income tax time. I'm paying the SS and Medicare at the full rate- think it's around 15% for the SS, and about 7%(?) for the Medicare. Our accountant tells me that approximately a third of what I make from that contract work goes towards taxes, and it seemed to be approximately 10% of it for SS and Medicare. Makes me wonder if it's really financially worth it to do that contract work. I've thought that for a couple years now, but I keep at it because it's very part time and really on my own terms, and I can put it down anytime something else comes up- that and the employers are great people it's been my pleasure to work with. Also keeps my mind active and more or less up to speed in my chosen profession. At this point, I guess that trumps the thoughts I have that I'm paying Uncle Sam too much of those contract dollars in taxes, because down the road, I might well decide it's not worth it.
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Old 06-05-2014, 07:27 PM
 
Location: southwestern PA
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Meh... you still get more out of the system than you put in.

If you want fair, let's do that - only get out what you put in (with interest of course).
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Old 06-05-2014, 09:04 PM
 
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Has the Op ever considered that you always pay for your SS if you have account. Taxes do not stop because you get SS; you continue to pay those that apply. If you die it goes to government to keep if single or wife and kids if married. that si the system created. Heck; your taxed on SS and some heavier than others. Its like insurance some pay and never collect such as auto; others collect because; its a pool.
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Old 06-05-2014, 09:29 PM
 
10,812 posts, read 8,058,272 times
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Originally Posted by Pitt Chick View Post
Meh... you still get more out of the system than you put in.

If you want fair, let's do that - only get out what you put in (with interest of course).
Thanks almost entirely to SS, my parents, my parents-in-law, and 3 of my grandparents were able to enjoy retirement without any financial assistance from me.
So even though I've not yet started collecting SS, I feel like I've already got out more than I put in.
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Old 06-05-2014, 09:32 PM
 
Location: Whereever we have our RV parked
8,764 posts, read 7,695,901 times
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Texdav. I don't quite get what you're saying. If you retire and don't earn any taxable income, you pay no SS any longer, as long as you don't make too much on other income.

Actually, this revelation gave me another thought I had while watching "Life Below Zero" Those folks on there work, but most are not taxed because its totally subsistence living. Or to put it another way, the govt. can't tax you if you work for yourself. Maybe that's what I'll try to do, just work for myself.
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Old 06-05-2014, 09:36 PM
 
Location: Wisconsin
21,535 posts, read 43,982,964 times
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Quote:
Originally Posted by Travelassie View Post
I'm paying the SS and Medicare at the full rate- think it's around 15% for the SS, and about 7%(?) for the Medicare.
Actually, it is much less - 12.4% for SS, 2.9% for Medicare - total 15.3% for both.

Tax Topics - Topic 751 Social Security and Medicare Withholding Rates

But, because you are self-employed, 50% of that 15.3% is also deducted from your gross earnings on line 29 of your 1040. That deduction means the federal income tax on your earnings is the same is if you had an employer paying that 50% FICA. That said, your earnings also affect the taxability of the SS you are currently collecting.

You need to figure your taxes - with and without your earnings. You're probably still coming ahead by a pretty good amount by working. And, those earnings contribute to future higher SS benefits, as well.
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Old 06-06-2014, 07:52 AM
 
Location: Verde Valley AZ
8,612 posts, read 9,676,241 times
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Quote:
Originally Posted by augiedogie View Post
I never thought of this till today, but I was thinking about the tax implications of working and collecting SS after retirement. Then I realized that if you work after retirement, you're actually helping to pay for you're own SS. Here's the example. Let's say you work in a retail store and make 10,000 in a year. So they take 7.5% out of your check for SS and medicare and the employer also has to pay 7.% of your check. That's about $1,500 a year. For a lot of folks that as much or more than the check they get a month from SS. So in essence, you're paying for a month of your own SS payment. Kind of a raw deal if you ask me after all those years of making payments to the govt.
That would be me...working in retail, collecting SS and still paying into it. I don't mind because it does raise my SS a little every year plus the COLA...if we get it. I figure, when all is said and done, I will collect more SS than I paid in but I figure that's just "interest".
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