Ideal W2 income to maximize SS Benefits

[ls015]

I and my wife have a business (S-Corp) and get about 150k profits every year. We can write off about $30k as expenses and left with $120k which we can take as W2 income(60k each) or $40k each and $40k as S-Corp distribution.

I wish we worked in a company other than ours and made W2 income since we are not having the discipline to take max W2 income every year. With all this freedom, I am afraid we are either writing off more or taking more as distribution. We are concerned about not getting SS benefits when we turn 65.

Can anyone help us come up with W2 income we must take each year to get max SS benefits at 65? I have 20 and my wife has 25 years till 65. Thanks in advance.

Should we both take W2 or just one take $120k? Any strategies in maximizing our SS?

 

[Tahoe Ray]

I and my wife have a business (S-Corp) and get about 150k profits every year. We can write off about $30k as expenses and left with $120k which we can take as W2 income(60k each) or $40k each and $40k as S-Corp distribution.

I wish we worked in a company other than ours and made W2 income since we are not having the discipline to take max W2 income every year. With all this freedom, I am afraid we are either writing off more or taking more as distribution. We are concerned about not getting SS benefits when we turn 65.

Can anyone help us come up with W2 income we must take each year to get max SS benefits at 65? I have 20 and my wife has 25 years till 65. Thanks in advance.

Should we both take W2 or just one take $120k? Any strategies in maximizing our SS?

You're my age...safest bet:

Make as much money as you can and save it. Don't count on social security. It will be a nice bonus if it is still around...

 

[ls015]

You're my age...safest bet:

Make as much money as you can and save it. Don't count on social security. It will be a nice bonus if it is still around...

I know that's a concern we all have but what if it's there and we miss out. Would like to have a 4 legged chair, SS benefits, 401k, House paid off and whole life.

 

[somarco]

Most of my working life I have been told that SS will not be around by the time I turn 65.

They were wrong.

 

[Tahoe Ray]

Most of my working life I have been told that SS will not be around by the time I turn 65.

They were wrong.

I'm sure this is true, but my advice is still sound.

Not to mention, those who pay vs. those who collect has shrunk a lot in the last 20 years.

I'm still not convinced I'll get anything social security-wise.

 

[Bevo]

I'm pretty sure a salary of around $129K (Individual) would get you the max SS benefits. I'm more sure that you're far better off focusing on making as much money as you possibly can in this wonderful industry of ours NOW, rather than betting on that pittance later.

 

[russelltw]

You might get something, but what will it be worth in today's dollars? I agree, invest what you make now. When you retire, move to some lower cost of living area here state side or abroad. Several clients of mine spend 4-6 months in Mexico each year during the winter.

 

[LostDollar]

(Please note, I am not an insurance agent or tax accountant, nor have I ever owned the tax types of businesses you are discussing.)

Here is the concept I would consider to try to compute what you want.

I would try to find a relevant Social Security or IRS document that explains how one's FRA (full retirement age) social security benefit is calculated from one's earnings history.

I would create a MySocialSecurity account and get my annual earnings history to date.

I would see how many years I have left to FRA which do not yet have earnings.

I would find out what the maximum allowed FRA payment from social security is.

I would see what the current maximum earnings level is where Social Security payments are still deducted from.

With all those known factors, it should then be possible to figure out a mathematical approach to getting an average W2 earnings you would need to add to your current earnings history each year to get you to the maximum FRA benefit payment. (My math skills are rotten so I am not able to precisely define the computational steps one might use.)

When you see whatever that number is, then you can also return to all the other comments above and consider whether you want to divert whatever that number is from other investment possibilities available to you.

Unless, or until, the Chinese take over, there will probably be some type of government benefit system. Hopefully it will not collapse to the extent of the Georgian systems discussed in another thread on the site.

(There is a site called MrMoneyMoustache which has a taxes subforum-that might also be an interesting place for you ask your question.)

 

[Yagents]

When you're self employed, you pay both ends of Soc Sec, which is about 15% of your W2 income. Better to fully fund Solo 401k (if not done so already), tax deduct it, put it in something safe to duplicate SS funds. Plus, it's a virtual guarantee that they will extend the age for FRA to the younger genaration, and life expectancy. Expect age 75 in near future legislation.

You're overthinking it, but if you're going to do so, are one of you going to pass away at an early age? If so, better to overload one person's SS, and living spouse takes higher spousal benefits.

Put excess savings from not paying SS into a fixed annuity, and annuitize it when you start taking SS. Create your own SS. (and not rely upon China)

 

[adjusterjack]

We are concerned about not getting SS benefits when we turn 65.

I don't understand your concern. One way or another you are already paying into Social Security (Self-Employment Tax).

You can go to the SSA website, each of you register for an account, and you'll be able to see what your estimated future benefits will be.