Coffee heat rising

Wages of Sin: Update

So after class this noon I schlepped over to the Social Security Administration offices with several missions in mind: First to find out what they’re going to do to me for the crime of earning yet another $2,400 over the poverty-level earned income limitation; second, to ask where to mail the Form SS-31 to ensure that this year’s RASL payment is counted as pre-2010 income; and third, to find out what to do with the couple hundred bucks that Unemployment Insurance is apparently going to send me.

Yes. Unemployment Insurance. Last week I got a $25 check and a notice saying the Feds had told the state Department of Economic Security that some of last year’s recipients were entitled to more payments than had been disbursed. No explanation of why, or of why I should be among those recipients when, say, La Maya was not so blessed. But apparently they’re going to send about a half-dozen checks. These also represent 2009 income, UI for the furlough days GDU inflicted on us in the first six months of that year.

Well. There’s no way of getting DES to fill out and send a Form SS-31. You can’t reach them on the phone—they don’t answer telephone calls, and if you manage to get through to an answering machine, they don’t return calls. They’ve barricaded the employees behind locked doors and they don’t let the public in. So how exactly to communicate to Social Security that this little chunk of illicit income—made so because it racks up still more dollars above and beyond the permitted $14,160 earned income—represents 2009  money remained to be seen.

After sitting around for an hour or so, I got to speak with a live human being, a very nice gentleman who seemed (as they all do) pretty knowledgeable.

He said that even though the amount I’ll earn as a result of taking on another class this fall will exceed the amount of a monthly benefits check, they will not withhold more than one check. So I’m only out the cash for October, not for October and November. In January, they’ll bill me for the small amount left to pay up. The missing $111 Medicare Part B premium, payable in October, will be extracted from the November check.

So, that’s not the disaster I feared.

He also pointed out that despite losing an entire month’s SS income in September, overall for 2010 I end up with more money than I would’ve had with full Social Security and only the income limit of $14,160. While that’s so, I noted, that doesn’t do me any good next month, when I need the money to live on.

Luckily, there’s an emergency fund to fall back on. But diddling it away on utility bills, gasoline, and food is not what I had in mind: that money is there to cover me if I get hurt or too sick to work. And we do know that at my age, the operative term there is not if but when.

Presumably by the middle of next semester—if the college gives me three sections in the spring semester—I’ll be able to replenish the $975 that will have to be consumed next month to meet basic expenses and the extra $111 engrossed from November’s income for October’s Medicare B payment.

It’ll all work out over the long term. It’s just annoying, because it puts the eefus on my goal of living within my monthly means. And it does bite into my emergency savings.

Meanwhile, the Social Security dude was able to enter the data from the Form 31 from the state while I was sitting there. He said that issue is now settled.

We shall see.

As for the weird burst of Unemployment Insurance, he said that UI is not regarded as earned income! And that issue is a nonissue.

So it goes. A couple of questions were clarified. It’s inconvenient and it’s going to make next month another straitened, penurious month, something I’m mightily tired of after three months without enough income to cover base expenses. But what the heck.

Not what I wanted to do with my afternoon. SDXB, who’s back in town for the nonce, had invited me over for lunch. That scheme was scotched. Tomorrow, maybe.

Shafted!

Remember how those two women at Social Security told me it isn’t true that when you out-earn the poverty-level earnings limitation imposed on those who are forced to take SS payments early, the government takes away an entire month’s benefit check? That instead in the following year Social Security calculates what you owe in tax (it takes back $1 for every $2 you earn over $14,160, effectively a 50% tax), and you are given the option of either having the amount prorated over a number of months and deducted from your benefits in relatively affordable chunks or of sending the government a check to cover the tax?

Well, it turns out they were wrong.

After having told “Roselyn” that I expected to earn $14,900 this year, yesterday afternoon comes a notice in the mail informing me that my September check, which is paid in October, will be withheld, fuck you very much. Any amount that remains after the government calculates and confiscates the tax it thinks it’s owed will be repaid in January.

This will leave me $551 in the hole this month.

Feeling a little skeptical about “Roselyn’s” claim, as you will recall, I telephoned Social Security a second time on September 3, reaching one “Alison.” This CSR confirmed what Roselyn said and reiterated that the government’s procedure is not to take away an entire benefits check when it finds out you will exceed the earnings limitation.

Based on these two assurances, which were repeated several times by each woman during those conversations, I accepted a third course this fall, to run in the second eight-week session of the semester.

The pay for that contract will push my income high enough that Social Security will withhold not one but two benefits checks!

And that will put me $551 in the hole for September and for October or November, whenever they next get around to raping my income.

For God’s sake!

I don’t know what I’m going to do. I can’t get out of the course the chair offered to me and I accepted. Piss these guys off, and they won’t hire you again. So, I’m going to have to eat an $1100 shortfall. I certainly won’t be eating food, since at that rate I can’t pay the utility bills and buy groceries.

There are two choices:

1. Withdraw enough from The Copyeditor’s Desk as dividends to cover the shortfall. Actually, the S-corporation will have to pay me a few hundred bucks as “salary” in December, anyway. A $500 salary amounts to about $600 taken out of the corporate coffers, because as my “employer” CE Desk has to pay its half of FICA and some other taxes. For me as an individual, the net comes to about $375. So to make up a net of $1100, I will have to withdraw about $2,000 from CE Desk, in combined salary and dividends. That’s about half the corporation’s present cash holdings.

or

2. Raid savings set aside for an extreme emergency in which I would not be able to work at all. The emergency savings fund is still in an after-tax bank account, and so no tax consequences would occur if I steal from it.

However, if I get sick or hurt so I can’t work—and we’ve already seen that, as possibilities go, this is not as remote as one might think—then I will have that much less to cover my needs. As it is, emergency savings combined with Social Security would just barely cover expenses for one year. Take $1,100 out of it, and it’ll cover a helluva lot less than that: maybe 10 months.

God. What a mess!

Why did those two women tell me a phony story? Did they lie on purpose? Did they think it was funny to deliberately mislead some old lady and plunge her even deeper into poverty? I’m quite sure of what they said, because I asked both of them to confirm it, and I wrote it down as they were speaking: I have almost verbatim notes of our conversations.

Here’s how this shakes out, projected dollar by projected dollar:

Because the community colleges, like GDU, outsource their payroll to PeopleSoft, paychecks come in at cockamamie times. My second paycheck in October, when the third class kicks in, will only cover one week, and so I won’t have enough to cover my expenses that month, either. Apparently I’ll make it up in November (this assumes they rape me in September, which they’ve announced they’re doing, and then again in October, not in September and November). But meanwhile, between now and the middle of November I have to cope with a shortfall of over $1,000!

While it looks as though I’ll be flush as Croesus in November and December, that extra money has to be saved to cover the month-long winter break, when I’ll have no pay, and the penurious summer, when there’s a good chance I’ll have no teaching income.

{sigh}

What on earth to do?

Probably it would be better to take the $500 annual “salary” from the S-corporation in September or October; this nets about $375. It’s required, but there’s apparently you can pay it to yourself whenever you please.

Defraying the shortfall with a CE Desk “paycheck” would leave $725 to to make up out of savings, but with no tax consequences. That much remains in the S-corporation’s account, and so if a really dire emergency came up, the money would still be there. It’s your basic theft from Peter to pay Paul.

Assuming, though, that nothing awful happens over the next year, because property taxes have dropped a bit, I should be able to use that savings to help replace the $725 raided from the emergency savings fund. If I drop the umbrella on my car & homeowner’s insurance, the two cost reductions combined could be put toward the lost $725.

If the gods smile and I get three sections a semester next year, I should be OK. A summer-session course would guarantee OK.

But it looks like we’re talking just OK here. Short of taking a large drawdown from long-term savings that are still struggling to recover from the crash, we can forget any fantasies about vacations next year. 🙄

On the other hand…it’s a nice opportunity to go back on the half-off diet!

New refinement on Year 1 retirement strategy

So far—all of two months into this new Bumhood adventure—I’m doing so well at staying on budget and living within my apparently reduced means that I’m thinking next fall I should teach two sections instead of three.

The community colleges pay $2,400 per class. Six times $2,400 comes to $14,400. Contrary to predictions, Social Security did not raise its earnings limitation this year: it remains at $14,160. While I certainly can afford to sacrifice half of $240 for the privilege of earning slightly more than a sub-poverty wage, I can’t afford the way they expunge it from your pocketbook. As soon as SS find out that you’re over the limit, they take away an entire month’s payment. From that they withhold the amount they think you owe them. But they don’t give the rest back until the following January. So, that’s $1,000 that goes away for months, maybe as long as a year.

My net on one section is $2016. True, it’s twice as much as a thousand bucks, but prorated over four months, it’s only $504 a month.

Meanwhile, I have over $16,000 residing in savings now. Because I started with a $14,500 cushion and so far have not spent anything like as much as I expected, the “cushion” keeps accruing feathers. Every month, another chicken’s worth of feathers gets stuffed in there. In addition, The Copyeditor’s Desk has $2,000 remaining to pay out in “dividends.”

When SDXB said you don’t need anything like as much as you think to live well in retirement, he wasn’t kidding. At the moment I’m coming nowhere near using all the money I budgeted to survive. That will change in the summer, when utility bills rise into the stratosphere, but by then enough will have accrued from the monthly underruns to cover those extra costs. It’s amazing. The guy is right: money happens!

Standing down off one section in the fall presents several sterling advantages:

1. Bureaucratic hassle avoidance. Not having to deal with Social Security over an earnings limit violation is worth a great deal. After the endless fights and negotiations with ASU’s HR department, the shape-shifting COBRA monsters, and now Medigap insurance predators, I have developed a bureaucrat flinch reflex.

2. Reduction of taxable income. Of course, it’s not enough to drop me into the lowest tax bracket. However, as it develops, Medicare, Medigap, and COBRA premiums are regarded as tax-deductible medical expenses, as are my long-term care premiums! Those will add up to at least $3600 this year. That’s 13 percent of an income cobbled together with Social Security and five sections. And that will make those costs deductible, even if I do earn a small wage from the S-corporation this year.

3. Brief reprieve from freshman comp. Since I’ll be teaching one section of magazine feature writing next fall, taking on just two sections will leave me with only one section of composition to have to struggle through. If I’m lucky and the section is 102 instead of 101, then I’ll have only three papers to have to grade for that course.

4. Hugely reduced course load. The feature-writing course is an eight-week online section. The chair has already agreed to make one of the comp courses he expects me to teach next fall an eight-week session, so that at any given time I’ll only be teaching two sections. If he stands by that, then I could end up with one composition course in the first half of the semester and the feature-writing course in the second half.

Hot dang! This would get the dratted comp class out of the way in eight weeks. The feature-writing course is online, and so for the rest of the semester I wouldn’t have to go to campus at all. At 19 miles per gallon, that represents a nice little saving in gasoline. And it sure represents a pretty saving in workload.

While I enjoy meeting with the young people and watching them bounce around, freshman comp is a discouraging class to teach. Especially in the community college, a good portion of the students struggle with serious learning problems and ESL issues. There’s very little you can do to help them. Really, in one semester there’s nothing you can do to make up for the shortcomings of 13 years of third-rate education, and there’s nothing you can do to change the way a dyslexic young adult’s brain is wired. You can’t teach them in 16 weeks what they didn’t learn in 13 years of K-12 training. It’s frustrating, and in many students’ cases, it’s just downright sad. So…any time I can get out of a section, I’ll be happy to do it.

Now, this scheme has some significant disadvantages, too.

1. Summer bills will deflate the cushion by about $1,200. This amount would be recovered by October if I’m reaching three sections.  By the end of December, I would have plenty of cash to carry me over the winter break: barring a huge unexpected expense, around $4,800.

However, in reality that’s way  more than I need to survive for a month of unemployment. With one fewer section to teach, I’ll still be back in the black by the end of October. The amount accrued to make it through winter break would than be about $3,300, more than enough to get by when utility bills are low.

2. Boredom factor. Teaching two sections will not give me enough to occupy my time. I’ll have to come up with new things to do.

That may not be a bad thing. 😉

3. Boss annoyance factor. The departmental chair thinks he has me for three sections this fall. He won’t like having to hustle up someone else to teach a section of composition on short notice. Given the precariousness of my position, I hesitate to annoy this guy or bring myself to his attention in any negative way.

I really can’t make this decision until I get my tax forms. When ASU was jacking us around with furloughs, I changed the number of exemptions on my withholding, as to retain enough income to  live on. I never changed them back. Then at the end of the year I changed the amount withheld for Arizona’s rip to the minimum amount, so as to avoid having any more money gouged out of RASL and my vacation pay than absolutely necessary. This means that instead of having a refund coming, I may have to pay taxes this year.

Tax Lawyer has the mountain of paper I shipped to her office. It’s an incredibly complicated mess. She said she expects to have the returns ready the middle of this week. So it will be several days before I know whether I’ll have to pony up a chunk of the cushion to the government. If a lot of that money goes away, obviously I can’t take a chance that there won’t be enough to support me through 2010.

The longer I delay telling the departmental chair that I won’t be teaching three sections in the fall, the larger the headache for him. Hence, the greater the Boss Annoyance Factor.

However, the community colleges are not the only places to find freelance teaching work. Because I’m experienced in developing online courses, the fact is I can teach for any college in the nation. With the extra time freed up by dumping that third section in the fall, I could hustle up some jobs in other states, which might pay better than the District does. In 2011 I’ll be allowed to earn as much as I can, and so it would be useful to find someplace that pays more than $2,400 per section. Someplace that’s not ASU: I could earn about $3,200 teaching there, but I really want to be done with ASU, now and forevermore.

Speaking of teaching…time’s a-wastin’. Gotta run!

w00t! Budget success!!!

The American Express bill  arrived today. Hot dang! Just a little over $1,000!!

That’s within easy shooting distance of the $1,000/month post-Canning Day figure I’ve set for total discretionary spending (i.e., all costs that are not recurring monthly bills), and it’s well below my current $1,200/month budget.

And that’s without even trying very hard!

Last month’s success included a $97 bill for pool repair, a $50 trip to Home Depot, and a $25 junket to Lowe’s. Plus the $30 flu shot that GDU’s cockamamie insurance wouldn’t cover. Criminey, I even went to Whole Foods in this billing cycle!

So pretty clearly, even at the $1,000 target, there’s room for some play.

This month I’ve been consciously aiming for the $1,000 budget—last month, I had in mind $1,200 as the spending limit. So far, I’m in the black overall…but we’re only a week into the budget cycle, and I’ve spent about $60 more than planned for that first week. But catching up should be fairly easy: I’ve got all the food in the house I need, probably won’t have to buy gas for another week…uh oh.

Nooo… I take that back: the plumber’s coming over this morning. Day-umn! Bathtub drain is clogged. That’ll be a hundred bucks.

Okay…so I’m about to be about $160 over budget for the first week of this month’s budget cycle. That just means I’ll have to stay out of grocery stores next week. Not a very tall order, since the freezer is so full I can barely close the lid.

So, what’s the explanation for this little flicker of budgetary joy? A couple of things:

1. Mindset. I just made up my mind that I was going to spend less. Somehow, like making up your mind that you’re going to eat less and eat better to lose weight, that seems to set you on the right track.

2. Keeping track of every expense, to the penny. I keep an Excel spreadsheet in which I subtract expenditures from the amount budgeted for each billing cycle.

3. Strategizing shopping trips. I made three Costco runs and three trips to Safeway, each time with lists in hand. All were scheduled shopping trips, not serendipitous drop-ins on the way home from work. During the month, then, I had three shopping days, and on those days I went to Costco, Safeway, AJ’s, Trader Joe’s (once), and Whole Paycheck (once). Because I bought only what I’d planned to buy, costs at each of these emporia were kept under control.

4. Staying out of stores! Other than the grocers’ (if Costco can exactly be called a “grocery”), the only other stores I went into last month were Lowe’s and Home Depot, and the only reason I went to the Depot was that Lowe’s didn’t have everything I needed.

5. Not getting discouraged. Several times in the past few months, I’ve thought there’s no way in He** I can possibly get monthly expenditures down to $1,200. Then when I realized even that was too high, I thought I was doomed! But lo! Here we are closing in on Canning Day, and spending is getting right down to where it needs to be.

Don’t give up! You can meet your goal if you keep at it.

With my share of the Downtown House mortgage coming out of a tax-free draw from a whole life policy, if “non-regular” spending stays at $1,000, my bare-minimum costs next year will come to $27,672. They’re that high because the cost of Medicare will be many times what I’m paying now for health insurance. Though I think my projection is accurate, I may be overestimating the total Medicare cost by as much as $100 a month. If that’s true, then I might get by on $26,472. My projected net from teaching and Social Security alone will be $26,453. Not quite enough to cover costs, but it doesn’t count the $2,000 I can pull down as a dividend from the S-corporation or the $3,960 in projected net vacation pay. In 2010, total net income should outpace total costs by at least $2,600.

The year 2011 will have to take care of itself. And it probably will.

Update: How deferred compensation works with Social Security

It’s 115 degrees out there, and I’ve driven from pillar to post through it. First went over to GDU’s deferred compensation provider. Turns out this is a benefit available to government employees, which you can add to your 403(b) or state retirement plan, allowing you to shelter more of your money than the modest amount most states match. When the employer emits a piece of compensation that you’d like to defer, the employer has to withhold and pay FICA and Medicare. The guy I talked with said I could indeed defer payment of my $5,300 worth of vacation pay and the first payment toward the $19,000 GDU owes me for unpaid sick leave. However, he did not know whether deferring these chunks of compensation would protect me from having Social Security benefits docked in 2010, a buck for every two bucks of unapproved income.

So, it was off to the Social Security Administration, a hefty drive from the mid-town offices of the insurance company that handles the State of Arizona’s deferred compensation scheme.

There a Social Security CSR, the first person I’ve spoken to about this who seemed to know what he was talking about, said that even though FICA and Medicare are withheld by the employer, deferring the pay does cause Social Security to ignore it when figuring that year’s Social Security benefit.

Hallelujah!

This will allow me to teach as much as I need to without losing a large chunk of Social Security. It means I will not have to use the back vacation pay and the first installment of RASL (unpaid sick leave is paid out over three years) to live on. Though I may not be able to invest the money optimally, at least it won’t go away and it can be folded into retirement savings to help support me through my dotage.

GDU, a.k.a. Our Beloved Employer, has to sign off on Form SSA 131, which states that the RASL and vacation pay is pre-2010 income. Knowing GDU, I will have to find the form, track down someone over there with measurable IQ, and then raise hell and put a block under it to get them to do this. No one at GDU seems to know the answers to these questions; the university has laid off so many people at HR that the survivors have no idea what they’re doing. Sometimes when they don’t know the answer to a question, they’ll guess and tell you something that’s dead wrong. Sometimes they’ll frankly tell you they haven’t a clue.

More about deferred compensation: I learned you can open an account and just have it sit there as a vessel, waiting for the RASL and vacation pay. That is, you don’t have to contribute anything out of your paycheck. That’s a relief! With a major life change looming, one has other things to do with a paycheck than to let it sit for a couple of years. Management costs, BTW, are nominal and in some cases nothing.

So: if anyone reading this is in the same boat…

A government employee faced with early retirement, when the amount you can earn and still receive Social Security benefits is strictly limited, can shelter severance pay with a maneuver like this:

Open a deferred compensation account, if you don’t already have it.
Have your employer sign and submit Form SSA 131, which certifies that your severance pay represents payment for work performed before you start receiving Social Security.
Have the severance pay rolled over into the deferred compensation account, realizing that FICA and Medicare will be withheld.
Let it sit there until you reach “full” Social Security age.

At that point you can withdraw part or all of it, as you please, without affecting your Social Security benefits. You will have to pay regular income tax on it when you draw it out of the deferred compensation plan, but by then your income will be so penurious the taxes likely won’t matter much.

Breaking up is hard to do…

Uh-huh...

Getting disentangled from the Great Desert University and onto Social Security is a nightmare hassle! Right now I have an inch-thick folder of information, instructions, and policies about retirement, and it’s growing. There’s another folder full of paperwork specific to Social Security and Medicare.

Today I learned that when the state of Arizona pays me the first of three payments for my accrued sick leave (known appropriately as “RASL,” as in “you get to rassle around trying to collect this”), I will owe FICA and Medicare taxes on it. And, even though it represents money earned in 2009, it will not be paid until 30 to 90 days after my job is terminated.

Canning Day is December 31. That means the RASL will come in 2010, after I’ve started collecting Social Security. And that means the $6,355 payment will count as part of the maximum $14,100 I will be allowed to earn in 2010.

This will mean that in order not to have my Social Security benefits docked, I will have to refrain from teaching three of the six community-college classes planned for 2010. And that will mean I will have to use the RASL to live on, rather than putting it into retirement savings, as planned.

Item: I can’t afford to stand down from teaching next year. When you do that, you drop off the departmental chair’s radar, and you may find yourself never being hired again. I know: this has happened to me before. Next year I will need to teach as many sections as I can get, so as to build a track record that will get me hired in the future for as long as I can dodder into a classroom.

Item: I need to put that RASL money in savings!!!!! My investments are down more than $120,000 from where they were a year or so ago, and they certainly aren’t going to regain that in the six months I have left to work at GDU. I just can’t afford to substitute RASL for teaching income.

The university will owe me a little over $19,000 in RASL. This amount will be paid in three annual $6,355 installments: in 2010, in 2011, and in 2012. I will reach age 66 in May of 2011; after that, the dock-your-Social-Security trick stops.

Plowing through the stack of policy statements on RASL, I see that a) you can delay applying for RASL as long as 180 days after you’re terminated, and b) you can defer the first year’s payment (and only the first year’s payment) by rolling it into a deferred compensation plan. And c) the second and third annual payments are disbursed on the anniversaries of your first year’s payment, which comes 30 to 90 days after the state receives your application.

So, to avoid having my Social Security benefits dinged by the RASL and to avoid being forced to use the RASL for living expenses, I’ll have to put two maneuvers into play.

First, I’ll need to delay applying for RASL until the middle of April, so that the soonest possible time it would be paid is mid-May, after my 66th birthday. If I fail to do that, then the second RASL payment will also arrive before I reach the “full” retirement age of 66, and I’ll be dinged for that one, too. If I time my application so that the first RASL payment arrives after May 7, 2010, then the second RASL payment will not arrive until I’m 66, at which time I can earn as much as I want (or can) without affecting Social Security income.

Second, I’ll need to establish a deferred compensation plan before my job ends. This is required. That may mean that even though the damned furloughs just ended, I’ll have to continue having my pay docked. That I will get the money back sometime in the remote future is irrelevant to the fact that I need all my paycheck to stash savings to live on after I’m fired.

The deferred compensation plan is managed by a private provider. That means, of course, that there’ll be fees involved. So I’m going to have to pay someone for the privilege of letting them take my money away from me. Isn’t that sweet?

That’s just the start of it. Then there’s the realization that because I’m being canned in December I have to apply for Social Security in October in order to get the payments started in January. But I will not get my last paycheck until after January 1, because of PeopleSoft’s obnoxious lagging pay scheme. Furthermore, because of the furloughs, the gross amount on an October paycheck will not reflect accurately what GDU will pay me over 2009’s twenty-six pay periods. Nor will I have statements from my freelance clients, nor will I have any clue how much my S-corporation will pay me between September and December 31.

So, how will the Social Security Administration calculate my benefits, when no accurate statement of my 2009 pay will be available until after those benefits are supposed to start?

Then there’s the business of all the vacation pay the SOBs owe me: $5,287 worth. This payment also will come forth in January, 2009.

Will that be held against my Social Security earnings, even though it represents pre-2010 income? Can that amount be rolled over into this deferred compensation plan?

And if I have to roll it over…my GOD! I intended to use that money to cover COBRA. If I have to roll it over into deferred compensation, I won’t have anything budgeted to pay for health insurance between January 1 and May 7, 2010. I’ll have to dig into my retirement savings to cover that.

The more I look into this stuff, the more questions come up and the more unfair the whole mess looks. No wonder I grind my teeth all the time!