Social Security benefits are federally taxed at three different tiers. The amounts depend on your income, marriage status and whether you file jointly or separately. Paying less in taxes can come down to how much money you pull out of your retirement accounts in a given year. Watch this video for tips on how to pay less in taxes on your Social Security benefits.
Tag Archives: Social Security
Retirement: How Monthly ‘Social Security’ Benefits Are Calculated (Video)
Planning to save for retirement might not be a priority. Luckily, you’ll have some help from Social Security. Different salaries can drastically raise or lower your Social Security benefits. Here’s how much you can expect, based on six different salaries. The average Social Security check in 2020 is $1,503. Figuring out how much you can expect every month when you retire depends on a few criteria. The size of your payment will be based on income from your working years, the year you were born and the age when you decide to start receiving benefits. Luckily, CNBC did the math for a wide range of salaries, and we can estimate your future benefits if you make between $30,000 and $100,000 per year. Remember: Social Security was not envisioned as your sole source of money for retirement, and the totals are always changing. Watch this video for a breakdown of how much you will get and how your monthly benefit will be calculated based on multiple different salaries.
Retirement: ‘How Social Security Works’ (Video)
Since 2010, Social Security’s cash flow has been negative, meaning that the agency does not collect enough money through taxes to cover what it is paying out. Even though there was still this vast trust fund behind Social Security, they started tapping that fund’s interest.
Starting in 2021, they will have to dip into the trust fund itself to cover those benefit payments, and even that pool of cash has an expiration date. Trustees of the fund expect that by 2035 it will not be enough to cover full benefit payments. Due to COVID-19, that date may come years sooner than expected, which has some retirees seriously worried about their future.
Crime: “Social Security Administration Scams” Are #1 Fraud Reported To FTC
From an FTC online release:
The Social Security Administration (SSA) scam is the number one scam reported to the FTC right now.
As soon as a caller threatens you, or demands you pay them with a gift card or by wiring money. It’s a scam. Even if the caller ID tells you otherwise.
If you get a call from someone claiming to be from the Social Security Administration, hang up the phone and remember:
- Your Social Security number is not about to be suspended.
- The real Social Security Administration will never call to threaten your benefits.
- The real SSA will never tell you to wire money, send cash, or put money on a gift card.
To read more: https://www.consumer.ftc.gov/blog/2019/12/getting-bombarded-scam-calls-youre-not-alone?utm_source=govdelivery
Retirement Myths: Expenses & Taxes Will Decrease While Savings, Social Security & Work Will Be Adequate
From Seeking Alpha article:
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Myth #1 – My Expenses Will Be Cut In Half!
One of the greatest myths for future retirees is that expenses will drop when you retire. Some think their living expenses will virtually cut in half overnight.
However, that is usually not the case. In fact, oftentimes retirees spend more in retirement (especially in the first few years) than they did during their working days. Why is that?
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Myth #2 – Social Security Will Provide for Most of My Retirement Needs
Many people are led to believe that they’ll manage to live just on Social Security in retirement. In most cases, however, that’s just not doable. Today, Social Security pays the average recipient only $1,461 a month in benefits. Over the course of a year, that’s $17,532. Meanwhile, the average retired household spends $46,000 a year. So there is a pretty large disconnect between the two. Property taxes alone in some blue states amount to what some receive all year in Social Security payments.
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Myth #3 – I Can Just Keep Working
Surveys show that many people nearing retirement would prefer to continue working to close any gaps they feel they have in their retirement funding. Or they want to continue working because they have no plans for their free time after they retire. Regardless of which reason, they want to keep working- and it does provide a dual benefit- it gives a further boost to your nest egg while at the same time reduces the number of years you’ll need to live off it.
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Myth #4 – It’s Too Late To Start Saving
They say the eighth wonder of the world is compound interest. And it obviously has a bigger effect the earlier you start saving, but you’re never too old to take advantage of its power to grow your money.
Aside from compounding, the IRS gives other incentives to save for those nearing retirement. IRAs, 401Ks, and other tax-advantaged plans give investors that are 50 and older the ability to make ‘catch up’ contributions. Those Traditional and Roth IRAs can make an additional $1,000 each year per investor. 401Ks and like plans can add $6,000 as a catch-up.
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Myth #5 – Taxes Will Be Much Less In Retirement
As you’ve seen in previous points, where we show your need to save more, invest more, and possibly work more – you will probably not be reducing your overall income that much. So if your income isn’t going to drop, then you shouldn’t assume with any honesty that your tax bill will drop.
The Trump tax cut reduced rates, but removed certain deductions. Even if we call it a wash, not many would bet that rates would drop further from here. The easy bet would be to wager they will only rise from here.
Read article by clicking here: https://seekingalpha.com/article/4273061-common-retirement-myths-debunked
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