Happy Grandparents Day!

Today is National Grandparents Day, but I’m sure you already knew that and have done something nice for your grandma and grandpa.

I grew up in the same town as my mother’s parents, so I got to spend a lot of time with Mam-ma and Granddad. But, being a silly kid, I didn’t take full advantage of that proximity.

The world changed dramatically during my grandparents’ lives, literally from horse and buggy to space travel, not to mention cultural and social advancements. I could kick myself for wasting all that time, seeing my grandparents almost every day, and not getting their perspective on the way the world had changed, not to mention their advice on how to deal with the changes I would encounter in my own life.

If your grandparents are still around, don’t be as stupid as I was. Talk to them, really talk, every chance you get.

It’s not your grandparents’ retirement: For most of my childhood, my grandfather was retired. He worked for an oil company and had a good pension that allowed him to quit work early. My grandmother stuck with her teaching — first grade her entire career; that woman had the patience of a saint! — until the school district made her pack it in. She, too, left her job with a decent retirement package.

Nowadays, folks are working longer, either because they need the money or they want to keep working.

AARP, whose acronym used to stand for the American Association for Retired Persons, held its annual convention last week. As part of the festivities, the group added a job fair for the un-retired.

According to a Marketplace story on the fair (audio here; text here), close to a third of Americans in their late ’60s are
still working. Most of those folks are problably postponing receipt of Social Security benefits.

That’s a good move if it works for your personal situation. The longer you wait to take Social Security, the bigger your monthly checks will be.

But some of those older workers started getting their government retirement checks and then went back to work when they found the money wasn’t quite enough, they might have created some tax trouble, too.

Social Security benefits and taxes: If your only retirement income is from Social Security, then you won’t owe any tax on the payments. But if you have substantial income in addition to your government checks, then a portion of your federal benefits might be taxed.

More specifically, if your total taxable income — wages, pensions, interest, dividends, and other such income — plus any tax-exempt income plus half of your Social Security benefits exceed $25,000 for singles, $32,000 for marrieds filing jointly, the IRS will get a cut of your government checks.

If you are married but file a separate return, any additional income will result in taxation of your Social Security benefits.

The taxable portion can range from 50 percent to 85 percent of your benefits. This worksheet from Complete Tax can help you figure out whether any, or just how much, of your Social Security will be taxed.

If you have to work to supplement your Social Security, then you have to work, taxes or no taxes. And if you invested wisely and are collecting a tidy sum in retirement, that income also could produce a tax issue for your government checks.

In either situations, just be aware that your extra earnings could have a tax cost. You might need to have withholding taken out of your benefits, or talk with our tax adviser about some other moves you can make to lower your post-work tax burden.