So, what's this my stepmom is talking about. If she earns more than 24K from dad's retirement and her's, SS will not pay her anything? Even though they paid into it for years? That just doesn't seem right. If you can manage to live off of 24K when you retire, why bother having a 401k plan because if your working, you are paying into both. Is that right?
Someone explaint the social security "cut" to me?
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Social Security does not penalize you for saving money. There is not an offset on that portion that I know of. But depending on your income, portions of your Social Security can be taxable. The rules are complicated and the formula used to determine your monthly amount is considered a mystery. Now I am speaking for retirees over 65. Age 62-65 rules are somewhat different.
Schmoe, if your step mother is drawing SS off of your Dad, or possible off of a previous husband or a combination of both. Or is she drawing off her own earnings only? Many things make this formula a bear to understand. Is she over 65 and on and on? I would rather try to describe how the Holy Trinity exists than try to describe how Social Security works.
Schmoe, if your step mother is drawing SS off of your Dad, or possible off of a previous husband or a combination of both. Or is she drawing off her own earnings only? Many things make this formula a bear to understand. Is she over 65 and on and on? I would rather try to describe how the Holy Trinity exists than try to describe how Social Security works.
She is getting 55% of his civil service retirement, then "some" from her retirement as a deputy Sheriff in Clarksville TN. Hers isn't much, but Dad's would be pretty nice. He retired as a GM-13 with 32 years in. That's all she's drawing now. She has some investments, but as far as I know, she's not pulling anything out of them. That's why I'm trying to figure out what's going on. She told me that when she hits 62, her benefits will go down about 100 a month. Just doesn't seem or feel right.
Vetteman, you are right in what you say that SS does not directly penalize you for saving money. But, as you also accurately say, some of your SS income will be taxable if you have income from other sources.
So, for an over-65 retiree with a pension, income from savings accounts, CDs, IRAs, pensions, etc. i.e. someone who has saved on their own during their lifetime, they are effectively losing some of their SS benefit due to taxation.
So, for an over-65 retiree with a pension, income from savings accounts, CDs, IRAs, pensions, etc. i.e. someone who has saved on their own during their lifetime, they are effectively losing some of their SS benefit due to taxation.
I wouldn't expect anything from SS by the time I retire. I would be happy if they didn't suddenly say everyone should go back and contribute 3% extra for the last 30 years because we have too many old people to feed and too few workers.
If what this page states is still true
http://www.ncpa.org/bg/bg152/bg152.html
There is a penalty for those in the 62-69 age bracket if they "retire" and continue to earn an income.
It's not until one is 70 that you do not lose Social Security benefits by exceeding the income guidelines.
http://www.ncpa.org/bg/bg152/bg152.html
There is a penalty for those in the 62-69 age bracket if they "retire" and continue to earn an income.
It's not until one is 70 that you do not lose Social Security benefits by exceeding the income guidelines.
Panda, I hear ya. My financial plan assumes no income from SS, though in reality, I'll a something. This way, I won't fall short of my target.
It's great we are all living longer these days, unfortunetly it's expensive staying alive, be it collecting longer from SS or extended healthcare. The government should have addressed the SS issue when we first knew people were living longer. To keep the pot from drying out, we'll continue to see more reduced benefits for the wealthier and higher retirement ages.
What's so golden about the golden years?
It's great we are all living longer these days, unfortunetly it's expensive staying alive, be it collecting longer from SS or extended healthcare. The government should have addressed the SS issue when we first knew people were living longer. To keep the pot from drying out, we'll continue to see more reduced benefits for the wealthier and higher retirement ages.
What's so golden about the golden years?
When I looked into this, it appeared that continuing to work while drawing social security benefits would not reduce the total amount of benefits you get (that is, unless you die before you can collect them). The additional benefits would be paid later.
So while continuing to work will reduce your social security payments in the years you worked, the payments in the years you don't work are increased to make up for it.
So while continuing to work will reduce your social security payments in the years you worked, the payments in the years you don't work are increased to make up for it.
Something here does not make sense. Pension and investment income does not count against your collecting a SS check. It is only wage, salary or business income. My dad collects two private pensions and full SS.
Think you and your stepmother are confusing various retirement systems. I am going to try and clarify what is going on, but a lot more information would be needed to actually determine causes and effects. Please note I am not a human resources professional but am familiar with the government retirement pension systems (CSRS and FERS) and a bit with Social Security as well. What you are highlighting is a complicated benefits case that may involve CSRS and Social Security, and possibly another state-run retirement system's benefits.
First, you state your Dad was a 32 year federal employee (GM/GS 13). Given number of years in service, he was probably covered under CSRS and did not contribute to Social Security as a federal employee. Most likely he had few if any covered Social Security wages. The check your stepmom is receiving is probably survivor's benefits from the Office of Personnel Management (OPM), which administers CSRS and FERS. You need to confirm exactly who is providing the pension fund check before drawing any conclusions.
Secondly, you mention your stepmom worked as a Deputy Sheriff. In many states, they did not contribute to Social Security either, and were in a state-run pension plan. You need to confirm whether she, in fact, contributed to Social Security. If your father had at least 10 years' covered SS earnings, a widow's benefit could be paid at age 60. That benefit amount is unchanged at age 62. The only way this benefit would be reduced is if she receives a non-covered state or local govt pension, based on her own, and not your father's earnings. Until you know actual source of her own pension, it is not clear that Social Security is the culprit for the $100 estimated reduction at age 62. However, I do not know OPM rules enough to know whether she might suffer a reduction for some reason under CSRS. Who said and how was the estimated reduction of $100 computed? Based on the info you provided, my inclination is to believe it is not an SSA-imposed reduction.
Third, several folks alluded to the earnings test. This applies to wages, salary, and some business income as a result of active participation in a business. Pensions don't count for earnings test purposes. If you exceed the annual earnings limit, then your SSA benefits are reduced. However, you gain parts of this reduction back at full retirement age. Go the ssa.gov to determine your stepmom's full retirement age. Social Security increases may offset a widow's pension by 2/3's of any noncovered pension based on your stepmom's own earnings. For there to be a $100 reduction, her noncovered pension would have to go up about $150. If her own pension is based on covered SS wages, then there would be no reduction.
As you can see, this is a complicated matter. Go to SSA.GOV and read the publications there. Before you go there, make sure you know the exact sources of the retirement pensions discussed here. Who pays them is critical to understanding any SS rules that had to be applied.
SOAPBOX: Remember your US representative and US Senators all made the rules this complicated. SSA and OPM merely execute the rules Congress passed. If you want them changed, communicate with your elected representatives.
First, you state your Dad was a 32 year federal employee (GM/GS 13). Given number of years in service, he was probably covered under CSRS and did not contribute to Social Security as a federal employee. Most likely he had few if any covered Social Security wages. The check your stepmom is receiving is probably survivor's benefits from the Office of Personnel Management (OPM), which administers CSRS and FERS. You need to confirm exactly who is providing the pension fund check before drawing any conclusions.
Secondly, you mention your stepmom worked as a Deputy Sheriff. In many states, they did not contribute to Social Security either, and were in a state-run pension plan. You need to confirm whether she, in fact, contributed to Social Security. If your father had at least 10 years' covered SS earnings, a widow's benefit could be paid at age 60. That benefit amount is unchanged at age 62. The only way this benefit would be reduced is if she receives a non-covered state or local govt pension, based on her own, and not your father's earnings. Until you know actual source of her own pension, it is not clear that Social Security is the culprit for the $100 estimated reduction at age 62. However, I do not know OPM rules enough to know whether she might suffer a reduction for some reason under CSRS. Who said and how was the estimated reduction of $100 computed? Based on the info you provided, my inclination is to believe it is not an SSA-imposed reduction.
Third, several folks alluded to the earnings test. This applies to wages, salary, and some business income as a result of active participation in a business. Pensions don't count for earnings test purposes. If you exceed the annual earnings limit, then your SSA benefits are reduced. However, you gain parts of this reduction back at full retirement age. Go the ssa.gov to determine your stepmom's full retirement age. Social Security increases may offset a widow's pension by 2/3's of any noncovered pension based on your stepmom's own earnings. For there to be a $100 reduction, her noncovered pension would have to go up about $150. If her own pension is based on covered SS wages, then there would be no reduction.
As you can see, this is a complicated matter. Go to SSA.GOV and read the publications there. Before you go there, make sure you know the exact sources of the retirement pensions discussed here. Who pays them is critical to understanding any SS rules that had to be applied.
SOAPBOX: Remember your US representative and US Senators all made the rules this complicated. SSA and OPM merely execute the rules Congress passed. If you want them changed, communicate with your elected representatives.
Ah, let's tax your income twice.
And tax your property by devaluing the dollar, and calling it "capital gains".
(Off Topic)
I've always wanted to look up in the tax code to see if there's any provisions for capitalizing mortgage interest and property taxes to increase the cost basis of a property.
There could be scenarios where this could make sense.
I've always wanted to look up in the tax code to see if there's any provisions for capitalizing mortgage interest and property taxes to increase the cost basis of a property.
There could be scenarios where this could make sense.
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It's very simple. You pay into social security all your working life. Then someone gets a cut and you are left with anywhere between nothing and some. That's your cut. Now go and bleed.
I have heard about this and now it's happening to my stepmother after my father died. It seems that if you make a certain amount of money, your social security will be cut accordingly. How does that work and why? If you paid into social security for years and have all the quarters reached, shouldn't you get back what you put in, regardless of how much you earn from a pension or 401K plan? It just doesn't seem fair when you got bums like my brother in law that doesn't do crap but still gets paid. I mean what? Your not allowed to make over 24K per year or something like that if you get social security? Educate me.
It's called stick it to the "rich". And feel sorry for the poor schleps who can't save a dime.
Totally sucks. I've paid through a$$ to SS since day one at work. If I had invested that money - not only would I be way ahead, the government would too when they tax it (at whatever level) But no, we don't want to reform social security.
Totally sucks. I've paid through a$$ to SS since day one at work. If I had invested that money - not only would I be way ahead, the government would too when they tax it (at whatever level) But no, we don't want to reform social security.
It's really supposed to be an insurance policy, not a savings account. Some people will get more than they pay in, some people less.
I agree with Pablo, though. The system rewards people who are fiscally irresponsible and punishes those who save on their own. Just like every other government run thing.
I agree with Pablo, though. The system rewards people who are fiscally irresponsible and punishes those who save on their own. Just like every other government run thing.
It can only get worse. Retirees are, on average, sucking out way more than they paid in and there are relatively fewer workers to fleece. There can't be a happy ending, which is to be expected if you are a late arriver to the Ponzi scheme. Medicare is in worse shape. The unfunded liabilities are more than $50,000,000,000,000.
Consider the social security tax to be mostly a donation to the general fund to be spent today and assume there will be no benefits for you when you retire.
Consider the social security tax to be mostly a donation to the general fund to be spent today and assume there will be no benefits for you when you retire.
looks like instead of fixing social security, the government made it where people would get less $$$ with this complicated tax code! my mom was approved for disability last month and can't collect because my dad is a civil service retiree with 25 years and draws a pension from fed govt and social security disability benefits. He works part time 16 hours/week (bored at home) Social security said if you make over 25k/yr. My mom doesn't get any disability benefits. She was approved; When my dad had a stroke and was in the hospital and rehab for a total of 6 weeks, they were hurting financially big time by the hospital bills of 25k bucks. Just to have your life savings wiped out. So if they make it harder to get social security, when you retire your income declines, and medical bills will get larger when your hospitalized. it's a no win situation. My mom and dad are on 8 medications each too. It looks like we will have to live super healthy/save for no social security benefits.
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