When you’re planning for FIRE, should you include income from Social Security in your projections? Well, today I aim to answer that question by talking about what I consider to be the worst case scenario: the Social Security Administration makes a unilateral cut to the benefit payouts.
I talk about how much that would be and why I think you should include some level of social security income in your retirement plan.
Additionally, I talk about the tax implications of receiving social security benefits while you’ve got other income, whether portfolio income or earned income. In 2019, if your “combined income” of 1/2 of the social security benefit and your other income sources is above $44,000, then 85% of your social security benefit can be taxed, at ordinary tax rates.
The math on that could look like this: $10,000 of social security benefits, 8,500 are taxable at 22%, or $1,870 in tax.
If you’d like to dig into the details of your own situation, please schedule a call so we can get into the specifics together!