Bottoming Financial Plays

[pmunch]

Here's a little tidbit to look forward to in Retirement:

"If you make too much, we'll tax your benefits."

Your Social Security benefits come from paying taxes while you were working, so surely they can't be taxed, right? Wrong. You may in fact be taxed on your Social Security benefits if you have substantial income from other sources, such as dividends, self employment, investment interest and other sources. And studies find many Americans aren't aware of the fact: Some 42% of pre-retirees surveyed by the Financial Literacy Center did not know that benefits could be taxed if their income in retirement exceeded a certain amount.

The rule is that if your combined income -- a measure that includes other sources of income and half of your Social Security benefits -- exceeds $25,000 for an individual or $32,000 for a married couple filing a joint return, you may be taxed on up to 85% of your benefits. People who find themselves in this group can make quarterly estimated payments or choose to have federal taxes withheld from their benefits. The Social Security Administration says the provision to tax benefits became law in 1983 and was "intended to restore the financial soundness" of the Social Security program and Medicare.

http://www.smartmoney.com/retirement/planning/10-things-social-security-wont-tell-you-1314999788631/?mod=1122&link=sm_article_retirement_newsreel#articleTabs