U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 02-22-2016, 09:29 AM
 
71,584 posts, read 71,751,865 times
Reputation: 49194

Advertisements

while i had planned on initially spending down our ira's while delaying ss the fact i am to young for medicare threw a monkey wrench in the works .

now early on we are mostly living on cash i set aside , the dividends and a small pension . that way i hope to get an aca subsidy .
Reply With Quote Quick reply to this message

 
Old 02-22-2016, 09:34 AM
 
Location: OH>IL>CO>CT
5,236 posts, read 8,402,791 times
Reputation: 7191
Quote:
Originally Posted by daves 57 View Post
after reading the answers to my initial question it sounds like im really "screwed" I just received my first social security check but I plan on working a while longer this year. ill make approx. 50,000 plus half of my social security 14,000 that equals 64,000. its 20,000 more than the 44,000 limit for which ill be taxed at 85% of my money.im not sure how much federal tax will be deducted from my paycheck by the time I quit but im sure it wont be enough to cover the total tax liability.is there a way I can figure how much I will owe so I can put some money away to help pay the bill.
You could try the IRS's on-line withholding calculator at https://www.irs.gov/Individuals/IRS-...ng-Calculator;

or use one of the worksheets at page 16 of https://www.irs.gov/pub/irs-pdf/p505.pdf

Also, you can have withholding taken from your SS benefits. See:
https://www.ssa.gov/planners/taxwithold.html
Reply With Quote Quick reply to this message
 
Old 02-22-2016, 09:48 AM
 
Location: Gilbert, AZ
3,182 posts, read 1,959,996 times
Reputation: 3320
Quote:
Originally Posted by mathjak107 View Post
while i had planned on initially spending down our ira's while delaying ss the fact i am to young for medicare threw a monkey wrench in the works .

now early on we are mostly living on cash i set aside , the dividends and a small pension . that way i hope to get an aca subsidy .
Makes sense.

I'm loath to actually plan for this, as I have several more years until retirement and the ACA rules may well change by then. I'm seeing articles about strategies for "wealthy" people to qualify for ACA credits, and then of course there are folks who want this sort of thing squashed.

Last edited by hikernut; 02-22-2016 at 09:58 AM..
Reply With Quote Quick reply to this message
 
Old 02-22-2016, 09:54 AM
 
Location: Paranoid State
13,047 posts, read 10,439,740 times
Reputation: 15683
Quote:
Originally Posted by daves 57 View Post
should I have taxes taken out of my social security or just pay at the end of the year when I file?
The answer is a resounding YES.
Reply With Quote Quick reply to this message
 
Old 02-22-2016, 02:35 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,929,938 times
Reputation: 6716
Quote:
Originally Posted by daves 57 View Post
after reading the answers to my initial question it sounds like im really "screwed" I just received my first social security check but I plan on working a while longer this year. ill make approx. 50,000 plus half of my social security 14,000 that equals 64,000. its 20,000 more than the 44,000 limit for which ill be taxed at 85% of my money.im not sure how much federal tax will be deducted from my paycheck by the time I quit but im sure it wont be enough to cover the total tax liability.is there a way I can figure how much I will owe so I can put some money away to help pay the bill.
Just pick up a copy of Turbotax for 2015 taxes and plug in your new income numbers (plus things like deductions based on 2015 numbers - unless they were somehow out of the ordinary). 2016 will probably be different than 2015 in terms of actual tax brackets and the like - but in all likelihood - not much. That will show you how much extra you'll owe. If you already use Turbotax - just create a second "dummy" return with the 2016 numbers.

Depending on your particular circumstances - how much in the way of extra taxes you might owe - you might have to/want to make an estimated tax payment or 2 or 3 or 4 in 2016. You can print out those 2016 estimated tax forms on Turbotax.

Note that there are rules in terms of how much you get from Social Security if you're still working and below a certain age. They are summarized here:

https://faq.ssa.gov/link/portal/3401...ement-benefits

Don't know if they apply in your case. Robyn
Reply With Quote Quick reply to this message
 
Old 02-22-2016, 02:46 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,929,938 times
Reputation: 6716
Quote:
Originally Posted by SportyandMisty View Post
The answer is a resounding YES.
Or one can pay quarterly estimated taxes. Very easy to do if you use Turbotax (or have an accountant - or both). And it is much easier to adjust estimated taxes up or down if necessary if something unexpected happens than to change any kind of withholding. The most important thing you have to do is to make yourself "penalty proof" (which isn't a sure thing in terms of withholding). Second most important thing for some people is having enough money on hand to pay taxes.

Note that I have never been a big believer when it comes to overpaying the government and getting a big tax refund in April. And I am especially not a believer at all today in these times of increased fraudulent tax filings. I'd rather have the government fight the guy who got a tax refund fraudulently using my account than have to fight the government to get *my* refund when someone else got it first. I always like to stay a little ahead of the government - not the other way around. Robyn
Reply With Quote Quick reply to this message
 
Old 02-22-2016, 03:19 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,929,938 times
Reputation: 6716
Quote:
Originally Posted by hikernut View Post
Sure, each person needs to look at their own situation. That $98,000 thingy is just an interesting data point.

A number of years ago I got rid of all my taxable mutual funds and have been putting taxable money into individual stocks. That gives a lot more control over the taxes, but it's a little more to watch. Maybe I'll regret it when I'm older!

My plan is to draw down a lot of the 401k's before we take SS (probably at 70), and then after that live mainly on SS and taxable accounts. (Not sure exactly when we'll retire, but let's say age 60 for this discussion). That way any inheritance will get a stepped up basis, and we won't need to worry about huge RMDs. If the stock market does really well the gains will be in the taxable account.

The introduction of the ACA and associated credit scheme throws a bit of a wrench into this plan. Before 65 we'll have too much income to qualify for any credits (lot of reportable income from 401k). We could try to get some credits by controlling our reportable income, but not sure if that would be worth it because it would likely increase our overall retirement tax bill. It hurts my head to think about it, honestly.
As counter-intuitive as it seems/uncomfortable as it feels - the best approach tax-wise is to draw down all taxable accounts (except for emergency/living funds for X years) before you touch any tax-deferred money that is taxable when withdrawn from those accounts. Unless and until you have to (e.g., you have to take RMDs). Because the money you spend in taxable accounts has been taxed already. So you don't have to pay taxes again. Why withdraw money from a retirement account that is taxable when withdrawn when you can spend principal in taxable accounts tax-free? We've never taken a dime out of our retirement accounts - and don't intend to until we have to (RMD stuff - a couple of years down the road).

BTW - my analysis assumes that your 401k doesn't suck in terms of investment options and/or that you can roll it over into a self-directed IRA at some point (I've never had a 401k - just my own pension and profit sharing plans which I rolled over into an IRA when the plans were terminated). And it has nothing to do with the ACA either (skipped all that nonsense because my husband and I were on Medicare when the ACA was enacted). But my approach would seem to be more ACA subsidy friendly than yours.

So why do you think you should draw down your 401k account first?

Also - I don't believe in the "wait until 70" stuff in terms of getting SS. At least not for everyone. When my husband and I started to take SS - at age 62 - our "break even points" were about at age 78-79 had we started to withdraw at age 70. For various medical reasons - I don't give either of us more than 50/50 in terms of living longer than that. If you think you'll live (a lot) longer - then it is obviously a better bet (but still a bet).

Finally - I love tax stuff. I can't control the markets - I can't control interest rates. I can't control my top line 100%. But I can very much control my tax situation and my bottom line. Once you start playing around with tax stuff more (you've already started to do so by buying/holding individual stocks - although I would prefer ETFs - you'll see what a powerful thing it is too). Robyn
Reply With Quote Quick reply to this message
 
Old 02-22-2016, 03:23 PM
 
71,584 posts, read 71,751,865 times
Reputation: 49194
for those with no pensions who need more than 1 or 2% withdrawals from bonds and cash they have only 2 bets .

they can take ss early and be more market dependent or take it later and be a lot less dependent on markets with an 89% bigger check plus colas . .

so they either take on more market risk or more longevity risk .

being a couple i sooner bet more on our longevity by delaying . our withdrawals from our investments will be a lot less once ss kicks in for us . dead is dead , i couldn't care less about break even although odds are high one of us will do better then break even .,
Reply With Quote Quick reply to this message
 
Old 02-22-2016, 08:10 PM
 
Location: Gilbert, AZ
3,182 posts, read 1,959,996 times
Reputation: 3320
Quote:
Originally Posted by Robyn55 View Post
As counter-intuitive as it seems/uncomfortable as it feels - the best approach tax-wise is to draw down all taxable accounts (except for emergency/living funds for X years) before you touch any tax-deferred money that is taxable when withdrawn from those accounts. Unless and until you have to (e.g., you have to take RMDs). Because the money you spend in taxable accounts has been taxed already. So you don't have to pay taxes again. Why withdraw money from a retirement account that is taxable when withdrawn when you can spend principal in taxable accounts tax-free?
Personal circumstances vary so widely that I think it's impossible to make such generalizations. Just to be clear, I didn't mean to imply that everyone should pull from their 401k first.

You are making a lot of assumptions about me (us) that may not be true. For starters, the tax on assets in our taxable accounts has not all been paid. There are large unrealized capital gains waiting.

Second, we have no pensions, and we'll (hopefully) be retiring before any SS checks are available. So in those first years we'll be able to pull some $$ out of 401k's at a zero federal rate. To me that's a no-brainer. Then at each marginal rate we estimate if we're likely to pay a lower rate by pulling early, or by waiting. There is no universal answer, IMO, as this all depends on a lot of different factors, some of which are impossible to predict.

Last edited by hikernut; 02-22-2016 at 08:49 PM..
Reply With Quote Quick reply to this message
 
Old 02-22-2016, 08:22 PM
 
Location: Gilbert, AZ
3,182 posts, read 1,959,996 times
Reputation: 3320
Quote:
Originally Posted by mathjak107 View Post
for those with no pensions who need more than 1 or 2% withdrawals from bonds and cash they have only 2 bets .

they can take ss early and be more market dependent or take it later and be a lot less dependent on markets with an 89% bigger check plus colas . .

so they either take on more market risk or more longevity risk .

being a couple i sooner bet more on our longevity by delaying . our withdrawals from our investments will be a lot less once ss kicks in for us . dead is dead , i couldn't care less about break even although odds are high one of us will do better then break even .,
A very good description.

Almost everyone views this purely as a break even problem, which is missing one of the main benefits of SS.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top