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Old 07-09-2014, 01:22 PM
 
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Quote:
upon FRA you have no limit on what you earn.
So until full retirement age (for me 67), a person is docked -- AND taxed -- if they make too much.
AFTER, full retirement age they're still taxed if they make to much, but they're not also 'docked, the 1 for 2.

So if my 64 age benefit is 1,600.....and I work....that 1,600 will be docked and taxed.
But once I get to 67....I'll get the 'full' 1,600.
It (or a portion of it) will still be taxed, but at least I'll get the entire 1,600.00.

Right?
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Old 07-09-2014, 01:30 PM
 
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Your confused about 2 different issues.

Under fra if you work and make over the limit you give back 1 dollar for every 2 you earn and are re-credited with that givwe back at fra and re-adjusted.

Regardless of age ss is taxed if your modified income which is all your taxable income plus muni bond interest plus 1/2 your social security is over certain max amounts.

First the ss get taxed on 50% of the amount and if you go higher still it gets taxed on 85%. I don't have the current max's in front of me right now.
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Old 07-09-2014, 02:23 PM
 
Location: it depends
6,074 posts, read 5,331,639 times
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Here's my plan, and the considerations that went into it: 1. Wife in poor health, I won't need to bulk up SS for better survivor's benefit for her. 2. Portfolio in good health, won't "need" to grab SS early. 3. Been exercising daily and eating right, plan on living to a very ripe old age. So I'm not going to claim until age 70, UNLESS health turns bad. Then I would claim right away, or as soon as I am able.
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Old 07-09-2014, 04:13 PM
 
Location: Las Vegas
13,879 posts, read 25,306,858 times
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Took a long time for me to come up with my plan. I'm still not sure it's the right thing to do but I still have some time to think about it. I am almost 60 but I have been officially retired since I was 53. I work now and then usually part time. After my H dropped dead without ever getting a nickel of the SS he paid for my first thought was take everything ASAP!

When I am 60 I become eligible for SS Widow's benefits. I am going to claim them at 60 hoping that $800 per month will let me make it OK till I reach FRA at about 67. I will give up the Widow's benefits at 67 and take my own SS. That's the plan as it stands today. I hope I am doing the right thing.

I don't mind working the part time jobs etc. But the pay is so low it's almost not worth it.

To minimize taxes we have several at home businesses that let us write off 1/2 of our housing/transportation expenses. Also thinking about putting in solar this year and that is an extra 30% of the cost tax credit.
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Old 07-09-2014, 05:26 PM
 
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I have a pension and most long term employees- those with 30+ years retire at 62. Our pension had a COLA which was rescinded in 2011 but a court recently said it had to be reinstated. When the COLA was removed several employees who normally would have retired at 62 worked between 1-3 years longer. That basically increased their pension and social security by 10% a year to offset the lost COLA.

A long term employee would receive more in pension payments and social security at 62 than they net working. Not including taxes our salary is reduced by over 20% for things we would not pay in retirement.

For example a single person making about $100,000 that has worked 40 years would have a pension of $72,000 plus $20,000 in social security. The net pay on the $100,000 would be $78,000 not including taxes that would reduce it further.

I love my job and my commute is not bad so depending on my health I still may work past 62. I will have 40 years at 62. I will select the pension option that leaves my wife the maximum so that will reduce the pension by 12%. So instead of 72% of my final 3 years I would get 63% plus social security.

I have time to make the decision.
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Old 07-10-2014, 03:41 AM
 
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here is a very interesting article if you have not seen it yet by famed researcher michael kitces. it explains the pitfalls of how you can jump from 25% to a 46% marginal rate in the blink of an eye with the 2 moving targets we use to judge how much ss gets taxed.
stratagies like roth conversions or over funding life insurance for cash flow may avoid big tax jumps down the road if started early enough but everything is really going to be unique to your own income sources,level and tax brackets.

The Taxation Of Social Security Benefits As A Marginal Tax Rate Increase? | Kitces.com
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Old 07-10-2014, 05:33 AM
 
Location: Henderson, NV
1,091 posts, read 1,216,424 times
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Quote:
Originally Posted by rdflk View Post
Is there an age at which you CAN make as much as you want and not have the SS taxed OR not have the benefit reduced?
Yes, that would be the year of your Full Retirement Age. What you make that year doesn't matter. If you take SS earlier than the year you reach FRA and exceed income limits (I believe it's around $14,500 right now) then you lose $1 in benefits for every $2 you earn over the limit.

Whenever you start collecting SS, your payment will only go up when you get cost of living raises, it won't go up say when you reach FRA or age 70 or anything.

Waiting until age 70 instead of collecting at 62 does increase your monthly payment, but, if you calculate how much money you would have been paid for those 8 years, I'm pretty sure you don't actually start making more money until age 83 or 84 (it's been a while since I ran the numbers, but I thought it was around 14 years).

I have a pension which pays me enough, so I'll wait until Full Retirement Age before I start collecting, that way there's no penalty for income earned. Then I'll start into my 401k when I have to at 69 1/2.
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Old 07-10-2014, 05:42 AM
 
Location: Henderson, NV
1,091 posts, read 1,216,424 times
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Quote:
Originally Posted by yellowsnow View Post
Took a long time for me to come up with my plan. I'm still not sure it's the right thing to do but I still have some time to think about it. I am almost 60 but I have been officially retired since I was 53. I work now and then usually part time. After my H dropped dead without ever getting a nickel of the SS he paid for my first thought was take everything ASAP!

When I am 60 I become eligible for SS Widow's benefits. I am going to claim them at 60 hoping that $800 per month will let me make it OK till I reach FRA at about 67. I will give up the Widow's benefits at 67 and take my own SS. That's the plan as it stands today. I hope I am doing the right thing.

I don't mind working the part time jobs etc. But the pay is so low it's almost not worth it.

To minimize taxes we have several at home businesses that let us write off 1/2 of our housing/transportation expenses. Also thinking about putting in solar this year and that is an extra 30% of the cost tax credit.
That's a smart way to do it. Get the widow's benefit at 62 and then switch to your own when you reach FRA. I'm not positive, but I believe that there is a reduced widow's benefit if you've remarried. Since you said 'we' I'm guessing that you may have. If so, you might want to check into that, also if the earning limits affect you also.
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Old 07-10-2014, 05:45 AM
 
Location: Henderson, NV
1,091 posts, read 1,216,424 times
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An interesting article to read here:

Taxes on Social Security Benefits | Nolo.com

It explains a few things.
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Old 07-10-2014, 05:47 AM
 
71,463 posts, read 71,652,652 times
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Quote:
Originally Posted by Darthfrodo View Post
That's a smart way to do it. Get the widow's benefit at 62 and then switch to your own when you reach FRA. I'm not positive, but I believe that there is a reduced widow's benefit if you've remarried. Since you said 'we' I'm guessing that you may have. If so, you might want to check into that, also if the earning limits affect you also.
if the spouse filed early the survivor benefit they are filing against is cut from what their spouses fra would have been even if they take it at their fra.

it just isn't slashed a 2nd time if the surviving spouse files at fra.
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