you are welcome.
Mike Piper’s free site is based on sound Finance principles.
2 Likes
Due to my re-entry to the job market with a ‘sunset career’, I was able to have higher SS payments on my own, and did take SS right at age 65, while DH (4 months older than me) did delay some until it made financial sense for us for him to take it at the same time we set up our penalty free annuity monthly stream of payments (neither of us have pensions).
1 Like
I am thinking about it too. Just logged in to SSA.gov and also did their suggested login.gov setup. Looked at earnings history. And looked at total paid (SS and Medicare)…. was reminded that lots of money came from my paychecks over 40+ years.
2 Likes
I am a little shocked by this - but many people go into unfamiliar waters when it comes to time shares, and how the scammers then go to second phase and scam them some more. This FBI warning due to where the profits are going - to violent Mexican drug cartels.
1 Like
Yep and the same amount came from your employers. Except for that one year when Obama gave us a break on SS, but of course no one remembers that.
Did you apply for SS online? There is an in-person option, but from what I have heard the risk about SS is somebody ELSE trying to make claims on your account. Feeling like online is the way to go.
I applied online. It took a few minutes to go through the questions. Things like address, spouse’s name and DOB, years we both retired, etc.
Surprisingly it said I should expect at least a month delay while the review my case.
The biggest surprise was reviewing our contribution histories. I’d forgotten that I hadn’t been “employed” in over 20 years, when I was in my early 40’s. What I’ve been doing for the past 20+ years doesn’t fit the IRS’s definition of work, but it isn’t retirement either. 
1 Like
I’d gather that if you haven’t been paying Social Security taxes, along with your employer or yourself as a contractor, they won’t credit you with those years. If you haven’t paid SS for over twenty years, you’ve saved a lot of money!
4 Likes
Exactly. I have a lot of years with zero contribution. By transitioning away from “earned” to passive income I avoided a lot of SS contributions, and therefore will receive only a modest SS check. No regrets.
I’m a case study in what’s wrong with our tax code.
1 Like
If you don’t pay SS and then get less back in retirement, then that seems like an appropriately designed system. Don’t the main issues with passive income lie elsewhere, like in differences between the tax rates applicable to capital gains vs other income, or in the step-up basis for capital gains upon death?
Yes! And there’s even more. A passive investor can do a series of 1031 exchanges and grow their wealth substantially while paying no taxes and receiving Obamacare subsidies, and then slowly sell off their real estate to harvest long term gains essentially tax free for the first $120,000/year and then a big chunk at 15% rate.
How is the first $120k tax free, you might wonder? If a married couple has $120,000 of LTCG and no other income, and uses the standard deduction of $29,200, their taxable income is $90,800. all LTCG.
The tax rate on the first $94,000 is 0%. And of course no SS or self employment tax.
2 Likes
A great deal for those who know what they’re doing, and have the funds to invest. And of course, the property has to appreciate to make this plan worthwhile, (not a problem in recent years), and hope the tax laws don’t change to their detriment. I would definitely not do this as a DST again, however, what an irritant.
2 Likes
And of course it’s never quite as simple as that. Rental income is taxable ordinary income and Roth conversions throw everything off.
First world problems.
1 Like
And the stae of California taxes capital gains as ordinary income.
Washington has no income tax, but has a tax on long term capital gains (with an exception for real estate and an exemption of the first $250,000 of gain).
Which leads to a strange result.
Long term capital gain: 7%
Short term capital gain: 0
Unbelievable, but true.
2 Likes
It is weird. So I would imagine, people with a choice will make decisions to make short term capital gains instead of long term gains. Good they didn’t include real estate, though. Wonder if this will be repealed.
1 Like
Short term capital gains are taxed as ordinary income at the federal level, so WA couldn’t find a loophole to tax them as it would be directly against the state constitution.
The current exemption went up to $262k. 
2 Likes
I can’t imagine anyone taking short term gains to avoid the state tax because doing so would result in a greater federal tax increase than the state tax savings. But there might be an odd situation where my intuition is wrong.
Edited to say: the sentence above makes sense on some level but is so confusing as to qualify as gibberish.
4 Likes
Well, you know how messed up and confusing the tax law is. How about a situation where you have a large amount of capital gains (whether short or long term), but a huge amount of writeoffs. So you pay a low federal tax rate when everything is added/subtracted, but if the state is only looking at taxing people on capital gains no matter what the entire tax situation is, I can see a case for trying to make them short term gains instead of long. That is, if it works that way. Seems like the state wanted to go after a very small number of people, like @BunsenBurner’s husband. He’s probably one of those billionaires that aren’t paying enough taxes 
She wishes!
2 Likes
I thought it wasn’t possible, but @busdriver11 might be on to something. The lowest federal rate is 10%, lower than Washington’s LTG 7%. So for that scenario to make sense, you’d need to have zero or negative taxable federal income.
Which might be possible. If you had huge losses and no federal liability whatsoever it might behoove you to take short term gains and avoid all taxes.
1 Like