Benefits Planner: Retirement | What Income is Included in your Social Security Record? (2024)

FAQs

Does retirement income count towards Social Security income? ›

Pension payments, annuities, and the interest or dividends from your savings and investments are not earnings for Social Security purposes. You may need to pay income tax, but you do not pay Social Security taxes.

When you receive income from your traditional 401(k), 403(b) or 457 salary reduction plans, you'll owe income tax on those amounts. This income, which is produced by the combination of your contributions, any employer contributions and earnings on the contributions, is taxed at your regular ordinary rate.

15 Contacting Us 17 Page 4 Page 5 1 Social Security and your retirement plan Social Security is part of the retirement plan of almost every American worker. It's important to know how the system works and how much you'll receive from us when you retire.

Covered earnings include most types of wage income and self-employment income. Today almost all types of wages are covered by Social Security (notable exceptions are earnings from certain state and local governments and from railroads).

For the earnings limits, we don't count income such as other government benefits, investment earnings, interest, pensions, annuities, and capital gains.

Will withdrawals from my individual retirement account affect my Social Security benefits? Social Security does not count pension payments, annuities, or the interest or dividends from your savings and investments as earnings. They do not lower your Social Security retirement benefits.

To sum it up, you'll owe income tax on 401(k) distributions when you take them, but no Social Security tax. Plus, the amount of your Social Security benefit won't be affected by your 401(k) taxable income.

Social Security benefit taxes are based on what the Social Security Administration (SSA) refers to as your “combined” income. That consists of your adjusted gross income, plus any nontaxable interest you earned (and certain other items) and half of your Social Security income.

Bottom Line. Yes, Social Security is taxed federally after the age of 70. If you get a Social Security check, it will always be part of your taxable income, regardless of your age. There is some variation at the state level, though, so make sure to check the laws for the state where you live.

Social Security is an earned government benefit for seniors, people with disabilities and children who have lost a working parent. Working people contribute to Social Security with every paycheck. A pension is income you set aside while you're working so you will be able to get a monthly paycheck when you retire.

What type of pensions reduce Social Security? ›

If you receive a retirement or disability pension from a federal, state, or local government based on your own work for which you didn't pay Social Security taxes, we may reduce your Social Security spouses or widows or widowers benefits.

The maximum Social Security benefit at full retirement age is $3,822 per month in 2024. It's $4,873 per month in 2024 if retiring at age 70 and $2,710 if retiring at age 62. A person's Social Security benefit amount depends on earnings, full retirement age and when they take benefits.

We: Base Social Security benefits on your lifetime earnings. Adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Calculate your average indexed monthly earnings during the 35 years in which you earned the most.

We use all your earnings covered by Social Security to figure your Social Security benefit. Be sure to report all earnings up to the maximum, as required by law. Net earnings for Social Security are your gross earnings from your trade or business, minus your allowable business deductions and depreciation.