If you have a pension coming in and any other income streams maybe you should think about retiring. To retire doesn’t mean that you completely stop working, just change your perspective on earning money.
Many taxpayers who are retired, disabled, or whose spouses or parents are deceased may receive social security or equivalent tier 1 railroad retirement benefits. The maximum benefit amount for 2008 for persons who retire at full retirement age is $2,185 per month ($2,323 for 2009). Some of these benefits may be taxable, depending upon the taxpayer’s circumstances.Taxpayers above a certain income level pay tax on a portion of their social security income, while lower-income taxpayers enjoy tax-free social security benefits.
Note: For purposes of this section, the term social security benefits
applies only to those payments made under the Old-Age, Survivors, and Disability Insurance program (OASDI). This is funded through the social security payroll tax and is based upon prior earnings. Social security benefits do not include SSI (Supplemental Security Income), which is a federally funded program of income assistance based on financial need for the aged, blind, and disabled. The Social Security Administration administers both programs, but SSI benefits are not taxable.
Full Retirement Age For workers born before 1938, full retirement age is age 65. The age is gradually being increased for workers born after 1937 until it reaches age 67. The entire process will be complete in 2027.
Taxation of Benefits
Under current law, up to 85% of a taxpayer’s social security and equivalent tier 1 railroad retirement benefits may be taxable. Generally, however, if these benefits are the only source of a taxpayer’s income, they will not be taxable. This also holds true if the taxpayer’s other income is minimal.
Forms SSA-1099 (for social security) and RRB-1099 (for railroad retirement) are used to notify the taxpayer of total benefits received during the year. The form also indicates the amount of repayment of benefits the taxpayer made, if any.
Each individual recipient of social security and tier 1 railroad retirement receives Form SSA-1099 or RRB-1099. For example, if a widowed parent receives one monthly benefit check that includes benefits for the parent as well as two minor children, each of them will receive a separate Form 1099 reporting his share of the year’s benefits.
So the upshot is if you haved a lot of savings or income streams and can take your chances with social security, maybe you can retire today.
Oct 20 2009
Kim Isaac Greenblatt
Can You Retire? Maybe
Tags: taxes