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Thread: How do freelancers retire?
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Oct 10, 2006, 07:30 #26
Originally Posted by demosfen
http://www.ssa.gov/history/InternetMyths.html
The SSA does not require that you accept the benefits, but the IRS requires that you pay for them:
http://ssa-custhelp.ssa.gov/cgi-bin/...hp?p_faqid=200
Even if you did not have a SSN, you would still be required to pay FICA. You'd just not be able to collect from the SSA when you retire.
This is why the Amish don't have to pay:
http://ssa-custhelp.ssa.gov/cgi-bin/...hp?p_faqid=514
As for canceling your SSN, I have no idea where you read that, but the SSA will not cancel an SSN:
http://ssa-custhelp.ssa.gov/cgi-bin/...hp?p_faqid=514
In extenuating circumstances, they may be willing to delete your application, but they will not delete your SSN.
Damn all that info with only 10 minutes of searching. Now who would have thought that the SSA website would have information on Social Security? That's a pretty big jump to make I guess.
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Oct 10, 2006, 08:08 #27
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Live off the 300 clients I will have by then, hosting fees alone will keep me very comfortable, and my kids/grandkids can do all the maintenance!!
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Oct 10, 2006, 08:28 #28
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Originally Posted by demosfen
Your point that rescinding your ssn NUMBER relieves you of the obligation to pay tax makes no sense and you aren't able to back up the claim. The fact that you aren't even doing what you are saying is possible makes the whole thing suspect.
This forum is intended to provide a useful exchange of information where people can help each other out and communicate in a responsible manner. If you are going to provide such risky and questionable ADVICE to people, you'd better be able to explain your position in a coherent manner and demonstrate that you have some knowledge about the subject matter. If not, you should stop telling people that they can stop paying their social security taxes - it's not fair to the users.The fewer our wants, the nearer we resemble the gods. — Socrates
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Oct 10, 2006, 09:35 #29
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Originally Posted by dreamscape
It's a jurisdiction matter, you give them jurisdiction by applying for SSN and SS benefits. IRS requires it under Admiralty law, there is nothing that requires you to pay into SS fund under Common Law. If you didn't have SSN, IRS wouldn't even take your check for SS taxes if you sent them one. If you don't have SSN and IRS were to sue you for not paying SS tax, it would be like them suing a Chinese citizen in US court. They just wouldn't be able to gain jurisdiction to apply their SS tax rules
Originally Posted by dreamscape
Originally Posted by dreamscape
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Oct 10, 2006, 09:47 #30
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Please, nobody listen to this advice. If you want to try and stop paying taxes, please do your own research and don't take advice from anonymous users on forums who clearly have very little understanding of US tax law.
Tax evasion is a serious manner, and is VERY illegal. This kind of thing can get you in to lots of trouble, and the above legal advice shouldn't be considered valid. Seek the counsel of a qualified attorney (with real credentials) or CPA (with real credentials) before making any decisions.The fewer our wants, the nearer we resemble the gods. — Socrates
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Oct 10, 2006, 10:48 #31
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Originally Posted by Sagewing
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Oct 10, 2006, 11:54 #32
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Chris - Would elimination of SS really reduce your taxes 15%? For that to be true, you'd have to be paying SS on 100% of your income (roughly speaking) which is avoidable with a good corporate structure. I think you probably know your way around the tax world, but don't you have a payroll/distribution model where you are only paying payroll taxes and social security on a relatively small salary while the rest of your revenue is paid to you in the form of cash distributions, etc? Probably you know all that, but when I see successful self-employed people paying 15% to SS, it makes me cringe!!! One of the best things about being self employed is that you don't have to pay as much tax as the full timers.Chris Beasley - I publish content and ecommerce sites.
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Oct 10, 2006, 11:57 #33
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Recently the availability of social security has increased and there are still studies being done to determine its estimated life.Chris Beasley - I publish content and ecommerce sites.
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Oct 10, 2006, 12:03 #34
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Originally Posted by demosfen
Originally Posted by demosfen
Some other things to note. With the advent of the patriot act and other laws that have passed since 09/11/2001, SSN requirements have changed. My child was born in April 2002 and had to have a SSN form filled out before leaving the hospital - it was optional when my oldest was born in 1999. You must have a SSN to get a passport or to get any public benefits. And I'm sure there are other legal reasons to need to get/hold a SSN.
Just some things to be aware of.Dave Maxwell - Manage Your Site Team Leader
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Oct 10, 2006, 12:11 #35
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Originally Posted by aspen
We were put in a "frenzy" over SS and people bought into it. It was a great election issue. Yet, I digress from the topic of this thread and move into an area of politics and I will just leave it at that.ssegraves [at] gmail.com
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Oct 10, 2006, 12:26 #36
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Originally Posted by aspen
Originally Posted by aspen
Who needs a study. Less people paying in, more people taking out == problem. Problem != bankruptcy.
Sure, there is a problem. But, that's lke saying that since the US is facing some likely inflation over the next few years, you should move all of your money out of dollars. Things are rarely that simple.
Case in point: people who pitch gold/silver as a great investment. Sounds good, but the math never adds up. It's been going on for 100 years, and if you look at gold values over any period longer than 3 years, it's a crap investment.The fewer our wants, the nearer we resemble the gods. — Socrates
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Oct 10, 2006, 12:47 #37
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Originally Posted by aspen
SS was never truly designed to be used, people would die off before they could collect. Now we live to be 90, that's a problem.
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Oct 10, 2006, 12:49 #38
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Originally Posted by tke71709
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Oct 10, 2006, 12:53 #39
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Well, regardless it's hard to avoid paying it
Back to the point of the thread: How do freelancers retire???
With the caveat that successful management of a freelancing career (financially, I mean) can require a big learning/execution effort, I would say that it's actually EASIER to retire well as a freelancer than it would be as a full time employee with a similar income.
The reason is that you have so many options - you can get a slick CPA to reduce your taxes (legally!) by just a few percent, and that additional income is compounded through your whole career. You can qualify for things like SEP-IRA and put more money into retirement than you ever could with a matched 401k or IRA.
So, in theory it's a great way to retire well!The fewer our wants, the nearer we resemble the gods. — Socrates
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Oct 10, 2006, 13:31 #40
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thanks i need to make a note if i ever move to freelance contact a CPA. ....now would contacting a CPA be a step to take before you make the move, right after you make the move, or once you have made the move and you've gotten the ball rolling?
ohh and whats a CPA? my fiance is going to get her degree in business so maybe she'll be able to help bc im clueless about these things.
thanks.
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Oct 10, 2006, 13:41 #41
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Ideally, before you make the switch, but it can be done at any time. Preferably, late than never, but it's best to consult with one before it becomes too late.
In other words, now is the perfect time.
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Oct 10, 2006, 14:06 #42
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Originally Posted by halfasleeps
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Oct 10, 2006, 18:55 #43
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SS is a pay as you go system, not a savings system. It is very misunderstood. The Social Security Trust Fund is not a bank account, its an accounting device. The future of SS in the United States has three distinct phases:
1. Trust Fund Growth (-2018)
Currently SS taxes exceed SS payouts. The government takes the extra money collected and loans it to itself.
2. Trust Fund Contraction (2019-2039)
Collected SS taxes no longer cover SS payouts. Therefore, the SS administration cashes in its bonds to make up the difference. However, the government owes the money to itself, and they already spent that cash in the "growth" phase. remember, this isn't a savings plan. There is no bank account that contains the money. So the government has to come up with the cash in one of three ways:
- Increase taxes.
- Sell more bonds to the public. Basically they convert the intragovernmental SS bond into a debt to the public. This process will drive up interest rates.
- Spend less on other governmental programs. The problem being that the SS obligation is large and the places available to cut are few.
Remember, that every year the SSA will cash in more bonds than the last year unless benefits are cut or SSI taxes are increased.
3. Trust Fund exhaustion (2040-)
At some point, the SS administration will run out of bonds. At that point, theoretically, they can no longer cover their promised SS payments. However, that does not mean that retirees will not get SS. They will still collect SS taxes in 2042 and the government can still pay that money out. The problem is that they can only pay out 74% of what they promised retirees that they would pay out. "Bankruptcy" is a dramatic term, but it doesn't mean "no payments," it means "sudden benefit cuts."
Predicting 30 years in advance is fraught with dangers. Who knows what will actually happen. If the economy grows fast enough, the tax revenues will increase (at the same tax rate) faster than the SS obligations do. Good times! The trust fund may never reach exhaustion. Or, if the economy stagnates, the SSA may cash in all their bonds sooner than expected. Crisis!
Obviously the benefits cliff at 2040 is a big problem. Most likely, the politicians will do some combination of cutting benefits and raising taxes before 2040 so nothing sudden will happen.
So, for retirement planning purposes, can you count on SS? Absolutely. You just can't count on the exact amount.
For the SSI tax dodgers: If you don't pay the taxes in, you don't get to draw the benefits out. You need 40 work credits to draw retirement benefits and 20 work credits in the past 10 years to draw disability. You get 1 work credit per $970 of reported income up to a maximum of 4 credits per year. Its a low bar, but something to think about.
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Oct 11, 2006, 21:48 #44
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And, before all of you go off the grid and opt out of SS, keep in mind that the SS benefits involve much more than just retirement benefits. (You'll learn all of that once you hit 40 and they start sending you these illuminating reports around your birthday on how much you've paid into the system and what it's worth)
Point in fact, that SS benefits pay out if you are disabled for the rest of your life. In my case, it's would amount to nearly half of my current monthly income. If I die right now, my husband would get benefits (about 30% of my current pay) as would each of my existing children. All of this amounts to more benefits than you'd likely get with a healthy insurance policy. Enough to allow your spouse to keep the house, put food on the table and maybe even help send the kids to college.
Also, think about whether you'd work for yourself for the rest of your life. If the answer is no, or maybe not, then opting out of SS would mean that you'd be throwing away the free money your employer would be paying into the system on your behalf.
Finally, keep in mind that there are income caps to most traditional retirement funds -- IRAs, Roths, Keoghs etc that will limit how much you can put away. If you were to put the maximum amount into each of these, you'd still be losing out on the additional money you'd have it you paid into all of them and into SS.
Sure, SS may not be around in the same form as it is now when you retire. But go under completely? Not likely. And certainly not without you being able to get back the money you and your employer actually paid into the system on your behalf. I can't imagine that would happen under any circumstances.
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Oct 12, 2006, 04:17 #45
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Originally Posted by SidraG
Originally Posted by SidraG
Have a look at this page.
http://www.ssa.gov/ww&os2.htm
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