| Sargent & Lundy Savings Investment Plan |
| KEEPING THE SECURITY IN SOCIAL SECURITY |
| The following excerpts are from an article in the Wednesday,
August 19, 1998 "Chicago Tribune". The opinions of the author,
Neil Downing, may or may not reflect those of the SIP Committee.
One of the most popular personal finance topics, judging from the mail and phone calls I get, is Social Security benefits. One reader recently wrote: "My husband, now being 65, is disabled so his Social Security has gone into effect. Because I'm 11 years younger than him, I want to know how much I can make before his Social Security is affected." Her question suggests two ways in which wages and Social Security benefits may interact to bring some complications. One involves the possibility of having to give back some of the benefits; the other has to do with the possible taxation of benefits. You can have a job and still receive Social Security retirement or survivor's benefits. But if your job earnings reach a certain point, you must forfeit some of your benefits, said Richard W. Cannon, manager of the Social Security Administration's Providence, R.I., district. How much in benefits you'll have to give up generally depends on your age and how much you earn: * If you're under 65 and earn more than $9,120 this year from a job, you must forfeit $1 in Social Security benefits for every $2 you earn over the $9,120 limit. For example, if you make $10,120 from a job this year, you'll have to forfeit $500 in Social Security benefits, Cannon said. * If you are at least 65 this year but younger than 70, and you earn more than $14,500 from a job, you'll have to forfeit $1 in Social Security benefits for every $3 you earn over the $14,500 limit. For instance, if you earn $15,500 this year from a job, you'll have to give up about $334 in Social Security benefits, Cannon said. * If you're 70 or older this year, you won't be subject to the earnings limit; you may earn an unlimited amount from a job and still collect full benefits. Keep in mind that the earnings test involves only money from a job (whether you work for someone else or you're self-employed). It does not include such things as interest from bank accounts, dividends, pensions, annuities and the like. Also remember that, even if you must give up some of your benefits, you can still wind up making more money overall - from your work and your benefits combined. Keep in mind, too, that the earnings test applies to each person individually, Cannon said. (So in your particular case, it won't matter how much you earn, assuming that you personally don't receive Social Security benefits this year; whether your husband must forfeit some of his Social Security retirement benefits depends on how much he earns.) The other way in which earnings and Social Security may affect you involves income taxes. In general, Social Security benefits are subject to federal income tax depending on your overall income level, said Internal Revenue Service spokeswoman Barbara C. Shuckra. There's a complicated formula you must use to figure it out, but here, in general, is how it works: * Add up all your income (including interest on tax-exempt bonds), then throw in half of your Social Security benefits. * If you're single, and the total comes to between $25,000 and $34,000, then up to 85 percent of your benefits will be taxed. * If you're married and filing a joint federal income tax return, and the total comes to between $32,000 and $44,000, then half of your Social Security benefits will be subject to tax. If the total comes to more than $44,000, then up to 85 percent of your benefits will be taxed. (Even if only one spouse receives benefits, you must add your spouse's income to your to figure whether any of the benefits are taxable.) This is just a summary of how the rules work. You can find out more about taxes and Social Security benefits by calling the Social Security Administration at 800-772-1213. For the basic facts of Social Security, ask for Publication 05-10080. For information on how work affects your benefits, ask for booklet 05-10069. |
This page updated on 9/4/98