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Calculating Taxes on Social Security Benefits.
Posted on 6/13/24 at 10:20 am
Posted on 6/13/24 at 10:20 am
5
Posted on 6/13/24 at 10:48 am to La Place Mike
Never understood why these benefits are taxed based on additional income. The additional income would be taxed. How does making any additional money have anything to do with what I paid in?
Posted on 6/13/24 at 11:04 am to thelsutigers
quote:because SS is just a mechanism for the government to take your money.
Never understood why these benefits are taxed based on additional income. The additional income would be taxed. How does making any additional money have anything to do with what I paid in?
Posted on 6/13/24 at 11:27 am to CarRamrod
If you play with the numbers, you will find that if you are supplementing your SS with 401K/IRA assets, you will face a LARGER tax burden with a SMALLER SS benefit. So if you wait until you are 70, LESS of your SS will be taxable for the same combined income.
Of course, there are many other factors to consider. One might be that any taxes you save might be taxed away when RMD's hit. The other might be that the eventual RMD's will cause you pay a lot more for medicare.
The Gov. has many traps to confiscate your wealth.
Of course, there are many other factors to consider. One might be that any taxes you save might be taxed away when RMD's hit. The other might be that the eventual RMD's will cause you pay a lot more for medicare.
The Gov. has many traps to confiscate your wealth.
Posted on 6/13/24 at 11:43 am to CharlesUFarley
quote:
So if you wait until you are 70, LESS of your SS will be taxable for the same combined income.
So basically you want to retire and rely on just the 401k for as long as possible, then claim SS at 70 (or probably like 75 or so for younger folks by the time they retire).
Obviously if you have poor health I think just get as much as you can now. Maybe thats the best strategy anyway given our propensity to have crazy inflation every couple of decades or so.
Posted on 6/13/24 at 11:53 am to VolSquatch
quote:
So basically you want to retire and rely on just the 401k for as long as possible, then claim SS at 70 (or probably like 75 or so for younger folks by the time they retire).
Obviously if you have poor health I think just get as much as you can now. Maybe thats the best strategy anyway given our propensity to have crazy inflation every couple of decades or so.
At least in my case, from a purely math standpoint, I will have more wealth at any age I am likely to reach if I take SS sooner (62) because it will reduce the drain on my other retirement assets, but that does mean that more of my SS would be taxable. I go over the numbers often and try to figure out the best course of action. I still have several years to make up my mind.
The idea that you will have more wealth if you wait to draw SS is only true if you are not spending any of your assets in the meantime.
I have already retired and begun to draw down my assets. I am 58. I retired in 2021 when I lost my job and decided I didn't want another one.
Posted on 6/13/24 at 12:25 pm to thelsutigers
quote:
Never understood why these benefits are taxed based on additional income. The additional income would be taxed. How does making any additional money have anything to do with what I paid in?
Because SS is not a savings program. It is a government welfare program with a dedicated funding stream.
And the additional income is subject to tax…
Posted on 6/13/24 at 12:28 pm to VolSquatch
quote:
So basically you want to retire and rely on just the 401k for as long as possible, then claim SS at 70 (or probably like 75 or so for younger folks by the time they retire). Obviously if you have poor health I think just get as much as you can now. Maybe thats the best strategy anyway given our propensity to have crazy inflation every couple of decades or so.
There is also a line of thinking that says you should take it earlier and incest it, if you think that you can do a better job of investing then the government can
Posted on 6/13/24 at 12:31 pm to La Place Mike
All the SS threads stress me out. My financial plan is simply not to expect it to be around when I would use it. Anything would be upside.
Posted on 6/13/24 at 12:35 pm to CharlesUFarley
quote:
The idea that you will have more wealth if you wait to draw SS is only true if you are not spending any of your assets in the meantime.
The "how much WEALTH" will I have in retirement mindset is one I need to be better about using for myself. Though I am a good ways from retirement.
I am biased because I do finances for a lot of family members who are more about "How much money do I have coming in each month to survive retirement" than they are "I want true wealth in retirement that I can use for vacations/hobbies/etc, maybe buy a modest car occasionally, plus survive".
And a big part of retirement planning does involve kind of gaming how long you think you'll live and what you want your lifestyle to look like. You can be set until you're 120 but if you get hit by a bus the day after you retire, whoops
Posted on 6/13/24 at 12:41 pm to LSUFanHouston
quote:
take it earlier and incest it,
InVest, not inCest.
Posted on 6/13/24 at 12:55 pm to makersmark1
quote:
InVest, not inCest.
Step-Nana can't pay her bills?
Posted on 6/13/24 at 1:18 pm to thelsutigers
quote:
Never understood why these benefits are taxed based on additional income.
It's as if the Government considers the 6.2% they take out for SS a pretax benefit.
Posted on 6/13/24 at 1:36 pm to LSUFanHouston
quote:
There is also a line of thinking that says you should take it earlier and incest it,
Invest it where and what returns would you need to earn to make up for the amount of income you would receive if you waited?
Posted on 6/13/24 at 2:39 pm to La Place Mike
I am in the collect at 62 camp now - damn the taxes.
Posted on 6/13/24 at 2:49 pm to CharlesUFarley
quote:
Of course, there are many other factors to consider. One might be that any taxes you save might be taxed away when RMD's hit. The other might be that the eventual RMD's will cause you pay a lot more for medicare.
And let’s be honest, they are banking on many people dying during that time so they won’t have to pay anything.
Posted on 6/13/24 at 9:42 pm to LSUFanHouston
quote:
There is also a line of thinking that says you should take it earlier and incest it, if you think that you can do a better job of investing then the government can
But that’s not how it works. You’re not beating the government investment as much as you’re trying to beat a specific, known number every single month you wait.
As I said in the other thread, SS depends on every individual situation. There is no specific correct way to don’t for everyone or there would be articles/calculators everywhere that would spit it out.
Posted on 6/14/24 at 9:19 am to lynxcat
quote:
All the SS threads stress me out. My financial plan is simply not to expect it to be around when I would use it. Anything would be upside.
Even the doomsday scenarios expect Social Security to be able to pay of approximately 75%-80% of promised benefits. That ain't the end of the world, and still will be significant income for most people.
Now, in a doomsday scenario, maybe Uncle Sam would give you some kind of tax incentive to make up for the shortfall...
Posted on 6/15/24 at 9:36 am to La Place Mike
I am 64 and took it at 62. Never looked back and working for cash now is king.
Posted on 6/15/24 at 7:40 pm to La Place Mike
So here’s the deal. If everyone on this board says they actually have what they say they have when SS comes around they’ll have to pay taxes on 85% of their SS payments. I know I will and either these people are bullshitting about what they have or they’re going to pay. Period.
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