In other words you are bringing home less taxable money so your social security is based on your taxable income. Maybe a money person has the answer.
2006-10-26 11:47:28 · 9 answers · asked by Anonymous in Business & Finance ➔ Personal Finance
Just a quick financial lesson. Social Security should be thought of as "extra" money, not what you plan to live on in retirement. People attempting to live on Social Security are not well-off by any means, nor do they usually live a comfortable retirement. I see it all too frequently.
Forget about what you're paying in to Social Security. If I had the option to pay ONLY into my IRA (I don't have access to a 401K), and forget about SS, I would. SS is just another tax. You have to understand that you don't have an "account" with money in it - they are using your money to pay other people. They will continue taxing to pay you. You have no control over your money. You are not earning interest. You are simply paying taxes. Sock as much as you can into your 401K, IRA, or other retirement vehicle. And be glad when you can retire without the government.
As to your original question, Social Security is figured on your gross income - before your 401K money is deducted. So don't worry: You're giving the government every possible cent. I'm glad that you're adding to your retirement on your own. It's the most responsible and safest thing to do.
2006-10-29 01:52:38 · answer #1 · answered by Katie Short, Atheati Princess 6 · 0⤊ 0⤋
It sounds sturdy, yet what happens interior of right here circumstances: (a million) An aggressive investor loses each little thing (2) A conservative investor would not have adequate to stay to tell the tale (3) A run-of-the-mill investor famous out he's been defrauded Hell, how approximately me? i've got invested in commonplace mutual money for the final 20 years. Now they're in the rest room. Thank God i'm no longer retiring any time quickly. What if i became? no longer elementary good fortune? In all of those circumstances, they are going to return crawling returned to the government, finding for help. So, now, no longer basically is the pool of money smaller, yet we've people who did no longer positioned something in, knocking on the door, crying for help by way of fact they have been given hosed taking the reins for themselves. i'm no longer partial to large government, however the commonplace individual spends no time reviewing their investments. they only sell off some income a mutual fund, praying it is going to likely be worth greater sooner or later.
2016-10-16 10:54:16 · answer #2 · answered by ? 4 · 0⤊ 0⤋
I think SS is based off of your gross income before taxes so your 401k does not effect it. There is much more potential for increase in wealth for retirement from your 401k than social security.
2006-10-26 11:57:13 · answer #3 · answered by Michael S 4 · 0⤊ 0⤋
yes but you are keeping ALL the 401K money and the difference in your Social Security return is minamul. Definitely put whatever your company matches into a 401K
2006-10-26 11:54:28 · answer #4 · answered by Jim7368 3 · 0⤊ 1⤋
Yeah, that's true but the incremental SS you will get will not be even remotely close to the earnings on that money you put into your 401k. If you're thinking about not contributing to your 401k to try and increase your SS benefits, you're a fool. Besides, SS is may be bankrupt in the next 15 years so don't count on SS for your retirement.
2006-10-26 11:51:53 · answer #5 · answered by aint_no_stoppin_us 4 · 0⤊ 1⤋
No. Social Security and FICA (Medicare) is calculated on your gross income - the total amount of compensation that your employer reported that you earned - not your Net Income - the amount that you take home after all deductions.
"A section 401(k) plan is a type of tax-qualified deferred compensation plan in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pre–tax basis. These deferred wages (commonly referred to as elective deferrals) are not subject to income tax withholding at the time of deferral, and they are not reflected on your Form 1040 (PDF) since they were not included in the taxable wages on your Form W-2 (PDF). However, they are included as wages subject to social security, Medicare, and federal unemployment taxes. "
http://www.irs.gov/taxtopics/tc424.html
2006-10-26 11:53:05 · answer #6 · answered by Gremlin 2 · 1⤊ 0⤋
no, the amount you defer into the 401k is still subject to social security and medicare tax. You are thinking of a flexible spending account deferrals which are not subject to these taxes
2006-10-26 11:59:53 · answer #7 · answered by waggy_33 6 · 0⤊ 0⤋
no, contributions to a 401k has no effect on social security.
2006-10-26 11:56:35 · answer #8 · answered by rpf5 7 · 0⤊ 0⤋
I checked my paycheck and it's based on the gross income and not gross income less 401K contribution.
2006-10-27 18:06:38 · answer #9 · answered by Steve R 6 · 0⤊ 0⤋