UNDERSTANDING YOUR
SOCIAL SECURITY BENEFITS
Pre-retirement:
If you haven't yet retired but are trying to predict your
retirement cash flow, be sure to request an Earnings and
Benefit Statement from the Social Security Administration
(SSA). It's simple to do—just call the SSA at the
number listed in your local telephone directory; ask for
Form SSA-7004. Fill out the form, return it to the SSA
and they will send you a projection of the benefits you
can expect to receive when you retire. You can also obtain
this information online at www.ssa.gov
Post-retirement:
If you're already receiving social security, try to avoid
traps like these that could cause you to pay some of it
back:
- The
SSA limits earnings (i.e., wages, commissions, etc.)
of retirees who are under the age of 65. If you earn
too much during this period, you may lose a portion
(possibly all) of your social security. If you think
you would like to continue working, it's wise to
make a comparison of how loss of benefits in the
short-run may affect possible Increases in benefits
in the future (i.e., because work continuation allows
extra contributions to the social security system).
- The
amount of income tax you pay on your social security
will depend on your filing status (married, single,
etc.) and
the level of your income. Be sure to take advantage of
tax planning, particularly if you expect fluctuations
in your income from year-to-year - planning ahead
may help
level the ups and downs and cut the amount of your social
security that becomes taxable.
- Watch
your investment choices. Tax-free interest from investments
like municipal bonds, for example, can increase the amount
of your social security income that is taxable. Here
again tax planning is a key factor which can help keep
a larger
portion of the benefits in your pocket instead of Uncle
Sam's.
Return
to Tax Considerations for Retirees
IRA Accounts and Your Retirement
Pension Plan Distributions
Sale
of Home & Moving
Paying
Your Taxes
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