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Lifetime Planner Issues with Taxes and Social Security

DJS1949

I've used the lifetime planner often, and am frustrated that I can't seem to find a solution to these two issues. Maybe I'm missing something? Didn't find any info in other posts here:

1. The annual income and expenses details that can be brought up for each year has two lines for taxes: Tax on Salaries and Benefits and Tax on Withdrawals. I have withdrawals that line is fine, but I have no salary or benefits. Any idea what it is looking at for these calcs? Only thing I can think of is it is treating Social Security as a benefit and calculating the tax on that. Is this correct?

2. There is a line item in the Portfolio Value that creates an annual deduction for inflation, which seems to be correct. However, it does not do the opposite for Social Security as these payments should be increased over time. I realize the increases do not correlate exactly to the standard inflation number, so maybe a separate Social Security inflation rate should be able to be entered. Am I missing somewhere that the Social Security payments can be set to increase over time?

Thanks.

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Comments

Chris_QPW

#1 that is correct. It looks like "Benefits" refers to Social Security.
There is actually three possible lines I'm seeing.

Image: https://us.v-cdn.net/6031128/uploads/editor/64/b8oc5o07a4gf.png

The first one seems to be the taxes paid from a paycheck for Social Security and Medicare. The second is any tax being paid like in the case of a paycheck federal/state taxes, and the Benefits part of it is taxes that would be paid on Social Security benefits. The last one is withdrawing from tax deferred accounts.

#2 From what I can see is that Quicken is assuming a cost-of-living increase that is exactly equal to the inflation rate you put in. With the numbers today's value that would make it look like it doesn't change at all. If you set it to display in future value you will see the amount going up.

Personally, I don't think the cost-of-living that Social Security gets is going to cover the real cost of living so I set this option:

Image: https://us.v-cdn.net/6031128/uploads/editor/9a/z4ftcd0ttxbw.png

Scooterlam

Chris_QPW said:

#1 that is correct. It looks like "Benefits" refers to Social Security.
There is actually three possible lines I'm seeing.

The first one seems to be the taxes paid from a paycheck for Social Security and Medicare. The second is any tax being paid like in the case of a paycheck federal/state taxes, and the Benefits part of it is taxes that would be paid on Social Security benefits. The last one is withdrawing from tax deferred accounts.

Expanding on @Chris_QPW comments, Tax on Withdrawals line also includes gains from taxable (brokerage) type accounts. And, "benefits" portion of the tax would also include any taxable pension income.

DJS1949

Thanks to you both for your input. What is strange is that I am running the latest version of Premier and i don't see the line "Social Security and Medicare Taxes". I did of course enter the SS payment my wife and I receive. Any idea why it doesn't show? As I mentioned, there is a line labelled "Taxes on Salaries and Benefits" which has calcs but we have neither. Any clue? Thanks again.

Scooterlam

DJS1949 said:

Thanks to you both for your input. What is strange is that I am running the latest version of Premier and i don't see the line "Social Security and Medicare Taxes". I did of course enter the SS payment my wife and I receive. Any idea why it doesn't show? As I mentioned, there is a line labelled "Taxes on Salaries and Benefits" which has calcs but we have neither. Any clue? Thanks again.

"Social Security and Medicare Taxes" is calculated from the Salary assumption, as @Chris_QPW mentions. It's comprised of Social Security contribution and Medicare tax. If you have no Salary, this line will be not there if you did not define (or exclude) Salary in LTP Assumptions.

Do you have a salary defined in LTP?

Image: https://us.v-cdn.net/6031128/uploads/editor/z2/c8d90m2jfhje.png

DJS1949

I see - so the SS and Med taxes are withheld from Salaries. Since we have none, there is no entry. And the Benefits tax is tax on SS Income. That clarifies. Thanks much.

Scooterlam

If you want to test this, simply create a "dummy" salary, then have a look at the tax expense lines for the year in which the salary is taken. Afterward, don't forget to delete or exclude the "dummy" salary from your LTP plan!