Back to work after retirement question re: earnings

[yy4me]

Like many of you, I tried to retire at age 62. Used COBRA to the end and then tried to buy health insurance. Well, you know the rest of the story. I'm back to work again but at a job level that is far different from the old days. I am about to hit the whopping $12,500 earnings figure where I will lose one dollar for every 2 I earn. My question is, does this mean my paycheck will be 50% less or that I will have to scrounge up more money at tax time. Heaven forbid if I should be living high off the hog with my $557.00 per month Social Security plus my meager paycheck. Anyone else find themselves in this spot?

[WCGreen]

1. Where do you get that Idea....

I just did a mock tax return with someone making 12,500 and receiving 6,500 in SS benifits...

You don't even have to start recognizing your SS income until you hit 25,000 in income....

Then you only pay tax on what you recognize as income...

[rzemanfl]

3. This is a Social Security issue, not a tax issue. n/t

[elehhhhna]

5. Too bad the OP'er isn't collecting INVESTMENT Income.

Thay don't offset SS for THAT.

Ask George & Bar how they spend their FULL SSI Payments.

[liberal hypnotist]

10. SS and Taxes

It depends on age. At 62, the max is 12,500. Everything over that comes under the 50% rule. At 25,000 and 62 the overage is $6000. You would have to repay $3000. Be very careful here. Once your in the collection system of SS, it is your responsibilty to get out. Can be painful.

[rzemanfl]

2. As I understand it you pay Social Security back, IRS has

nothing to do with it.

[rzemanfl]

4. This link explains it:

http://www.ssa.gov/pubs/10069.html#howmuch

[wishlist]

6. Need to report earnings amt to SS office, they will adjust your SS check

You are supposed to notify SS Administration if you expect to exceed the substantial earnings limit so they can reduce your Social Security payments accordingly. You will be overpaid if you exceed the earnings limit and keep receiving your full SS checks (before age 65) and the SS Administration will eventually withhold the overpaid amount from future SS checks. Fortunately once you are 65 your SS payments are no longer subject to an earnings limit.

[RebelOne]

7. I am collecting social security and working full-time.

And I am not losing one dollar for every two earned. At the end of the year, I have to pay taxes on my salary and social security combined. This year, when I filed, I only paid about $190 in federal tax and received about $250 back from state tax.

[trof]

8. Here's my Catch 22...

I collect a small pension from our company's "A" fund (paid by PBGC since my former employer went bankrupt) and S/S.
The two aren't enough to cover our modest living expenses.
The "A" fund (defined benefits) was stopped in 1986 and they went to a 401-K type "B" (defined contribution) plan.
Thanks to that I have around $300,000 in a rollover IRA.
That's where we get the additional 10-12 grand we need each year.

Every dime I take out of the IRA is taxable "income".
I have it set up to deduct 10% of every withdrawal for federal taxes.
The feds count my pension as income, but the state doesn't.
So my IRA withholding usually covers my federal taxes, and I pay no stae income taxes.
Notice I said "normally".

We had Ivan in 2004 and Katrina in 2005.
Both years I had to take out over triple my normal withdrawals from the IRA. A lot of damage done by natural disasters is not insurable. Like debris removal. That's strictly a cash on the barrelhead operation.

So...since I had so much more "income" in those two years it kicked me into a higher tax bracket.
And to add insult to injury, I had so much "income" that I also had to pay income tax on part of my social security.
The icing on the cake is that I've "blown through" retirement funds that I'm sure to need in the future.
:grr:

[liberal hypnotist]

9. SS takes it back

You will have overage deducted from your checks. Ex; if you earn an extra $2000. SS will hold checks til you pay back overage collected. Plus, you will be taxed on all your income including SS. I had to put my SS on hold while I went back to work full time for two years. In fact, for most of us, retirement is not a real option. I will work until the lights go out.