Coffee heat rising

A little massaging of figures

Interestingly, I found a table on the Social Security Administration’s site that calculates how much your “full” retirement age SS benefit is reduced according to the number of months you retire “early.” GDU is closing our office and canning me a year and four months before I reach so-called “full” retirement age.

This has caused many hours of worried number-crunching, because you can’t earn more than $14,160 in a  year without incurring a 50% surtax on the amount you earn above that threshold. If you have the temerity to overstep that boundary by a few dollars, Social Security withholds not just the amount you owe, but an entire month’s benefit! (Or more, depending on how gravely you’ve sinned.) You get it back, minus the amounted owed, the following January! That’s assuming, of course, that you haven’t starved to death by then.

It’s a real problem for me, because my savings, formerly adequate to support me in retirement, have been so dessicated by the crash of the Bush-Cheney economy that today a reasonable 4 percent drawdown plus Social Security plus the allowed $14,160 in part-time earnings will not yield enough to support me.

My financial counselor, however, advises me that my savings probably will outlast my lifetime even at a 6 percent drawdown, though he’s not happy at the prospect. On their own, the net of Social Security plus a 6 percent draw would leave my Ultimate Belt-Tightened Budget $5,544 in the red at the end of 2010.

Obviously, I’ll have to teach, do freelance editing, or some combination thereof as long as I’m splitting the cost of the downtown house with M’hijito. When that obligation goes away, I may just barely get by on Social Security and investment income. And of course…I can’t work forever—sooner or later the day will come when I can’t earn anything.

At the Social Security page above, I discovered that in January 2010 I’ll be “entitled” to 91.1% of my “full” retirement benefit. This comes to $16,026, about $2082 more than I’d been figuring.

Well. Every little bit helps.

It also occurred to me that I don’t have to put the $3,168 that I think I’ll net on the $5,280 GDU will owe me for unused vacation time, come next December, directly into savings. Instead, I could use it to live on in 2010.

In 2011, because I reach 66 that year, I’ll be allowed to earn something over $37,000 between January and my birthday in May (capricious as hell, isn’t it? the rules must have been written by a committee of asylum inmates!). This means that in 2010, I don’t have to worry about limiting earned income.

Taking the new Social Security estimate and adding estimated net vacation pay plus a 6 percent investment drawdown, I come up with a somewhat brighter estimate of 2010 income.

Without teaching at all, apparently I would end up only $2,376 in the hole at the end of the year. Since I will probably net about $1,920 for one community college course, this would mean I would have to teach only two sections a year to break even. That assumes that my estimate of the tax bite is correct, and that, at $39,672, I have not grossly underestimated my annual expenses.

However, if I chose to get off my duff and actually work, taking a 6 percent drawdown and applying the vacation pay to 2010 living expenses would provide a pretty generous income, without drawing any Social Security:

Teaching 5 & 5 (for a total of 4 GDU courses and 6 community college courses over a year), an unholy teaching overload, would give me plenty of money to live on in this first, terrifying year of unemployment. Even teaching a more reasonable load of 4 & 4 would provide an adequate cushion, assuming no really major expenses come up. The middle column in this table would have me teaching three sections a semester at GDU, which I think is disallowed—more than two would make you benefits-eligible, which of course is exactly what universities and colleges are trying to avoid by hiring adjunct faculty.

Advantages: It would free me from a lot of bureaucratic complications, and it would allow me to earn as much as I can.

Disadvantage: The massive workload would allow no time for freelancing, and over a year, I would lose my freelance clients.

A far better course load of 3 & 3 at the community colleges, combined with Social Security, vacation pay, and a 6 percent drawdown, also would keep me comfortably in the black. In fact, the result would be significantly better than working myself into an early grave:

Hot dang! In this scenario (if it’s accurate), I actually could bank the $3,168 vacation pay and still get by just fine.

Advantages: Though I still have to work, I don’t have to kill myself at it. The amount left here suggests I will have no problem covering expenditures, even if a large unexpected expense arises. There should still be time for freelance work, and every $2,400 earned there is one composition course I don’t have to teach!

Disadvantage: I’ll have to draw more than is desirable from savings.

Dropping the drawdown to 5 percent would reduce the total annual net to $45,170, cutting the year-end black ink to $5,500. Even at 4 percent, I stay in the black, but with a much smaller margin: about $1,950 at the end of the year.

What I ultimately do depends on what Social Security actually pays me, which will be different from my guesses. They’re missing two years of income that I can prove I had; though it’s not much, it may increase the benefits a little. More likely, though, benefits will be less than I estimate. That’s just the way my karma goes.

It also depends on the tax load: I’m estimating 20% based on the facts that not all your SS is taxed and that I will deduct everything I can think of from all this contract income. With any luck, the taxes won’t bankrupt me—but again, we’re depending on luck, and the way things have gone over the past year, it looks like the luck well is running a bit dry.

The safest course, it appears, will be to take a 5 percent or a 6 percent drawdown in 2010, start Social Security in January, and sign up for three community college sections in the spring semester. Then, in the fall, reduce the teaching load according to the amount freelancing brings in during the spring and early summer. Then in 2010 I can drop the drawdown to 5 percent or maybe even 4 percent, depending on how much freelance income is happening.