Retirement planning is becoming more important as the economy shifts and more people are exiting the workforce. Social security benefits and pensions are the main source of retirement income for millions of Americans. The government allows you to receive these benefits simultaneously.
It is important for you to understand the rules and regulations of your retirement fund. Education is key to preventing surprises later on down the line. You may be worried that your social security benefits will be decreased if you receive a pension. In this article, we will talk about joint retirement income and its taxation.
Most retirees start receiving social security benefits when they become 65-67 years old. The average retirement age is 65. You collect benefits after working for at least 10 years at a government-approved job. The government gives you a bigger benefit package if you wait to retire. Workers that retire at 70 get a higher benefits package than 63 year-old retirees.
You can choose how you want your pension payment to be made. You can opt for a large lump sum payment or have monthly “annuity” payments. No matter how you decide to receive your pension, it will still be taxed by the government. The government considers a pension to be taxable income. Social Security benefits can also be taxed if you file individually.
Married couples have to pay taxes on social security benefits, but the rate will be lower. If your pension exceeds a certain amount per year, you will be responsible for taxes. In addition to pension taxes, separate interest and dividends can be taxed as well.
Your social security benefits cannot be reduced by your pension income. Social Security income is classified as your gross earnings from your employer. Stock dividends and loan interest is not figured into the final earnings amount. The terms of your pension plan are usually defined by your employer. An integrated plan combines your social security and pension checks. This system reduces your yearly social security income.
Social Security Benefits and pension plans can be unbelievably difficult to navigate. Legal jargon can be very confusing and you need to understand all government regulation and ramifications. It is important to have a trusted financial adviser, such as an attorney, to help you understand the process.
The right social security lawyer will help you learn more about your employer’s pension terms. Failure to understand the pension plan you have in place can lead to disastrous consequences. A social security lawyer can also ensure that you pay a fair amount of taxes on your earnings. Disparti Law Group specializes in helping its clients with retirement planning and we will be able to assist you with any questions or concerns you have regarding your social security benefits or pension. Contact us today to get started on your path to easy retirement.