Retirement is expensive. We rely heavily on Social Security for added income, but the truth is that we often must rely just as much on other forms of income and savings. Many seniors have pension plans, Roth IRAs, 401ks and other savings in the bank to help them with their retirement costs. But do those pensions and other retirement savings account affect our benefits?
According to the SSA, Social Security benefits are only based off your earnings from 35 of your most profitable earning years. This means that the SSA dose not count other pensions and retirement saving accounts as earned income. At most, you would have to pay income taxes on your savings like normal. Your other retirement funds won’t affect your total benefit amount and will not require you to pay Social Security tax.
Social Security is taxed but only under certain circumstances. If you, as an individual, or you and your spouse, as a household, make over a certain dollar amount while collecting benefits you will have to pay taxes up to a certain percentage. None of those apply to any other benefit from any other retirement account. So, you can build a nice nest egg for a lengthy retirement.
Any extra funds you can provide for yourself will do you good in the long run. Your benefits are your benefits, and one shouldn’t subtract from the other. The Council for Retirement Security understand that retirement isn’t cheap and that knowing what effects your benefits and what doesn’t is key to financial security.
