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Old 03-16-2015, 12:42 PM
 
1,208 posts, read 706,129 times
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Quote:
Originally Posted by mathjak107 View Post
here is a max out situation for getting ss taxed.

a couple has an agi of 58k from assorted retirement income other than ss and receive a combined benefit of 24k in ss . so their provisional income is 58k plus 12k (1/2 ss ) or 70k .

that is 26k above the upper limit of 44k .

that means 20,400 in benefits are taxable which is the max at 85% of the 26k excess above the limit capped at 85%.

that increases agi to 58k plus 20,400 in taxable ss which is a 78,400 agi. .
Once at this maxed out situation, additional other income will not cause more tax on SS, but, if I get this right, if a couple with a few years differance in age that have reached that situation on one SS benefit, they will also get to enjoy tax on 85% of the spouses SS when it starts.

If that couple had a agi of only 23k other than SS income and a SS benifit of 18k making their provisional income 32k. Would that be the point at which they begin to be taxed on SS.
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Old 03-16-2015, 01:36 PM
 
12,825 posts, read 20,135,648 times
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Quote:
Originally Posted by Petunia 100 View Post
Your choice to obtain no marketable job skills is the bad choice which sunk you. Every day you have the option to stop making that choice, and so far every day you just keep right on making it.
Let's see ... getting out my crystal ball (or is that, my magic 8-ball?), predicting the exact job that will be "it."

Viel gluck!
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Old 03-16-2015, 01:38 PM
 
Location: P.C.F
1,973 posts, read 1,642,000 times
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We have been retired for a few years now and we live in SWFla so most the folks we socialize with in any form, are also retired.Thats to say screw the profiles and the graphs and the blablablabla... Reality is you need no less than 60% of your working net income for your retired net income.. with that being the case you should down size your home.. at 60% you better like where you live because traveling is off the table.. may there be a few exceptions? Yes there always are even if people have to lie about it.. So we can Honestly say BTDT.. we are living it.. Not guessing or trying to earn a living by writing articles about something we know nothing about..
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Old 03-16-2015, 02:12 PM
 
8,843 posts, read 5,126,299 times
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Quote:
Originally Posted by BayAreaHillbilly View Post
Let's see ... getting out my crystal ball (or is that, my magic 8-ball?), predicting the exact job that will be "it."

Viel gluck!
Are you saying that because one cannot predict the future, one should never bother to acquire any marketable skills? I disagree. Choosing to spend your entire working career working hard but not smart for minimum wage is not a recipe for success.
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Old 03-16-2015, 02:35 PM
 
Location: Los Angeles area
14,018 posts, read 17,732,288 times
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Quote:
Originally Posted by Macgregorsailor51 View Post
We have been retired for a few years now and we live in SWFla so most the folks we socialize with in any form, are also retired.Thats to say screw the profiles and the graphs and the blablablabla... Reality is you need no less than 60% of your working net income for your retired net income.. with that being the case you should down size your home.. at 60% you better like where you live because traveling is off the table.. may there be a few exceptions? Yes there always are even if people have to lie about it.. So we can Honestly say BTDT.. we are living it.. Not guessing or trying to earn a living by writing articles about something we know nothing about..
Well, that 60% is a pretty reasonable figure, and it is confirmed by your own experience in your own case. However, any such blanket statement is just silliness, in the final analysis. Suppose one's working net income was $120,000 a year. Sixty percent of that is $72,000, and forty percent of that is $48,000, which is plenty to live on if one doesn't mind adopting a more frugal lifestyle than was probably the case while working if the net was $120,000.

Or towards the other extreme, suppose one has a minimum wage job. There are such people out there, you know? In that case it would be difficult if not impossible to live on 60% of it.

It would be much more meaningful to cite a net amount of income and say, "Experience has shown us that we can live O.K. on $_____________ per year net, but it's tight and we can't allow ourselves any traveling." To cite a percentage is nebulous because we don't know how much money you are talking about.
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Old 03-16-2015, 02:57 PM
 
12,825 posts, read 20,135,648 times
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Quote:
Originally Posted by Petunia 100 View Post
Are you saying that because one cannot predict the future, one should never bother to acquire any marketable skills? I disagree. Choosing to spend your entire working career working hard but not smart for minimum wage is not a recipe for success.
Today's marketable skills may be tomorrow's outsourced-to-India (or replaced by H1B) job.

How about them apples?
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Old 03-16-2015, 03:49 PM
 
8,843 posts, read 5,126,299 times
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Quote:
Originally Posted by BayAreaHillbilly View Post
Today's marketable skills may be tomorrow's outsourced-to-India (or replaced by H1B) job.

How about them apples?
How are those apples any worse than accepting unskilled minimum wage work in the first place? At least one would have had the opportunity to save in the meantime.
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Old 03-16-2015, 04:07 PM
 
71,520 posts, read 71,694,121 times
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Quote:
Originally Posted by johnd393 View Post
Once at this maxed out situation, additional other income will not cause more tax on SS, but, if I get this right, if a couple with a few years differance in age that have reached that situation on one SS benefit, they will also get to enjoy tax on 85% of the spouses SS when it starts.

If that couple had a agi of only 23k other than SS income and a SS benifit of 18k making their provisional income 32k. Would that be the point at which they begin to be taxed on SS.
here is one of the best expalanations i have read on how it gets taxed. michael kitces did an excellent job .

https://www.kitces.com/blog/the-taxa...rate-increase/
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Old 03-17-2015, 03:32 AM
 
71,520 posts, read 71,694,121 times
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why you have to be so careful with the taxing of ss is you have two moving targets involved which can make for some crazy increases in marginal tax rates..

kitces gives 3 great examples of how marginal rates can respond by adding only a few dollars more to agi when dealing with ss. these really explain well what you are up against

one thing you will note is incomes are NOT very high at all!.

" Jeremy and Martha have an AGI of $28,000 (and no tax-exempt or foreign income), and receive combined Social Security benefits of $14,000. As a result, their provisional income is $28,000 + $7,000 (half of Social Security benefits) = $35,000, which is $3,000 above the $32,000 threshold. This means that 50% x $3,000 = $1,500 of their Social Security benefits are subject to taxation, which ultimately increases their AGI to $28,000 + $1,500 = $29,500."

"Continuing the earlier example of Jeremy and Martha, if the couple decides to take another $1,000 out of their IRA, this will increase their AGI by $1,000 to $29,000. As a result, it will also increase their provisional income by $1,000, which leaves them $4,000 above the threshold, resulting in $2,000 of their Social Security benefits being taxable. In the end, this means Jeremy and Martha end out with a total AGI of $31,000... their AGI increased by $1,500 even though they only took out a $1,000 IRA withdrawal due to the taxation of Social Security benefits! If the couple is subject to the 15% tax bracket, their additional tax liability on $1,500 of income is $225, which equates to a marginal tax rate of $225 (additional taxes) / $1,000 (additional income) = 22.5%. In other words, even though the couple is in the 15% tax bracket, their $1,000 IRA withdrawal is subject to a 22.5% marginal tax rate due to the formulas triggering taxation of Social Security benefits!"

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Donald and Sarah have an AGI of $44,000 and receive combined Social Security benefits of $24,000. As a result, their provisional income is $44,000 + $12,000 = $56,000, which is $12,000 above the upper $44,000 threshold. This means that $16,200 of benefits are subject to taxation (which is technically 50% of the amount from $32,000 to $44,000 plus 85% of the excess above $44,000), which ultimately increases their AGI to $44,000 + $16,200 = $60,200.

Continuing the earlier example of Donald and Sarah, if they decide to take out another $1,000 from their IRA, their provisional income will rise to $57,000, and another $1,000 x 85% = $850 of Social Security benefits will be subject to taxation. This increases their AGI by $1,850, which leads to $277.50 of additional taxes. The end result: Donald and Sarah face a $277.50 / $1,000 = 27.75% marginal tax rate even though they're in "just" the 15% tax bracket, due to their greater income triggering taxation of additional Social Security benefits at 85 cents on the dollar!
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Paul and Megan have an AGI of $58,000 and receive combined Social Security benefits of $24,000. As a result, their provisional income is $58,000 + $12,000 = $70,000, which is $26,000 above the upper $44,000 threshold. This means that $20,400 of benefits are subject to taxation (which is the maximum 85% of the $26,000 excess above the upper threshold, capped out at 85% of their total Social Security benefits), which ultimately increases their AGI to $58,000 + $20,400 = $78,400.

Continuing the earlier example of Paul and Megan, if they decide to take out another $1,000 from their IRA, their provisional income will increase to $71,000. However, since they are already capped at 85% of their maximum Social Security benefits being subject to taxation, their AGI simply increases to $59,000 + $20,400 = $79,400. In other words, because the maximum amount of Social Security benefits were already subject to taxation, another $1,000 of income simply increases their AGI by... $1,000! Assuming the couple is subject to the 15% tax bracket (which they should be after personal exemptions and itemized deductions), the additional taxes on $1,000 of income will be $150, which means their 15% tax bracket really does mean a 15% marginal tax rate!

Last edited by mathjak107; 03-17-2015 at 03:41 AM..
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Old 03-17-2015, 05:28 AM
bUU
 
Location: Georgia
11,881 posts, read 8,658,776 times
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Quote:
Originally Posted by Petunia 100 View Post
Are you saying that because one cannot predict the future, one should never bother to acquire any marketable skills? I disagree. Choosing to spend your entire working career working hard but not smart for minimum wage is not a recipe for success.
While true, it doesn't solve the problem for many, and the trend is markedly trending in that direction, rather than the direction your logic supports. For example:

America the Gutted: Glenda Bell | GlobalPost
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