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Question about taking SS early then buying it back
Old 08-20-2007, 12:52 AM   #1
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Question about taking SS early then buying it back

I realize this is unusual, but here is my question. Given the discussion around taking SS at 62, and then paying it back at a later date, say when you are at normal retirement age, then you can get the full retirement age payment, rather then the earlier, lower payment.
Now, IF your AGI happens to be high enough that you fall under the rule that reduces your SS payment by 50 cents on the dollar for all over a certain limit, I think it's 48K per couple, and let's say for argument sake that your AGI is high enough to reduce your actual SS payments to 0$ for the year.
1. Does that mean that you pay nothing back at the full retirement age, since you received nothing, and then qualify at the higher rate?
2 Before you question my sanity - would that then probably guarentee that you would be subject to whatever means testing rules that may be in effect at the time of 62, rather then later at full retirement age. Assuming of course that once you start SS, you would be grandfathered in, and not subject to then new means testing before re-qualifying.:confused:
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Old 08-20-2007, 08:49 AM   #2
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Keep in mind that it isn't AGI that reduces your SS payment, it is income from work. So, the downside to your plan is that you have to work.
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Old 08-20-2007, 09:51 AM   #3
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I did not realize that. So non-qualified short term capital gains and withdrawels from IRA do not reduce the SS. That's a big difference that I was mistaken about then.
Guess the only other question then is, regarding locking in for means testing before any changes. Worrying about doing that before a newly elected leadership starts tinkering with SS.
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Old 08-20-2007, 10:12 AM   #4
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Guess the only other question then is, regarding locking in for means testing before any changes. Worrying about doing that before a newly elected leadership starts tinkering with SS.
You can never "lock-in" for means testing. When the Clinton administration raised the maximum percentage of SS subject to taxation from 50% to 85% in 1993, it applied to folks already receiving SS, as well as those just starting to draw SS. The best you can do is avoid the additional taxation on the years you drew SS before the extra "means testing" was implemented.
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Old 08-20-2007, 01:05 PM   #5
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Keep in mind that it isn't AGI that reduces your SS payment, it is income from work. So, the downside to your plan is that you have to work.
I think that is wrong.... my mom does not work but pays taxes on her SS...
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Old 08-20-2007, 01:15 PM   #6
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Income from work directly reduces your SS payments if you are under your full retirement age in the form of a penalty.

AGI is used along with 1/2 of your SS to determine your tax liability.
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Old 08-20-2007, 01:19 PM   #7
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Income from work can reduce the SS payments you collect.

Income from any source can cause SS payments to be subject to tax.
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Old 08-20-2007, 01:23 PM   #8
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I think that is wrong.... my mom does not work but pays taxes on her SS...
The issue was not taxes but income from work. If you work and collect SS after a certain amount of work income your SS is reduced. Taxes are a separate issue.
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Old 08-20-2007, 02:51 PM   #9
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that's what I needed, Thanks to all
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Old 08-20-2007, 03:45 PM   #10
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Keep in mind that it isn't AGI that reduces your SS payment, it is income from work. So, the downside to your plan is that you have to work.
I have not looked into this. Are you saying that dividends and interest and capital gains do not reduce your SS payment? I assume that pension payments do reduce your SS payment T/F? Thanks Martha.
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Old 08-20-2007, 04:01 PM   #11
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I have not looked into this. Are you saying that dividends and interest and capital gains do not reduce your SS payment? I assume that pension payments do reduce your SS payment T/F? Thanks Martha.
Unearned income such as dividends, interest, and capital gains do not reduce your SS payment, although they may cause up to 85% of your SS to be taxable.

Pensions are considered unearned income, so they don't reduce your SS in the way we have been talking about. However, some of my friends have told me that their pensions will get reduced when they start drawing SS, but as I understand it, this is a separate issue having to do with the way their particular pensions work.
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