Working past age 70

[Jenise]

I intend to work well past age 70. I'm not sure what my SS retirement distribution will be, but I believe it will be sufficient to cover my living expenses. I also have a relatively small 401K that I don't intend to touch until I absolutely have to. Is there guidance on what to use for living expenses? Should I use SSI, and max out my 401K contribution at work to offset fed/state income tax? 

[VEpling2 · Accepted solution]

No.  There is no official guidance on whether to use your social security benefits or wages for living expenses.  Your first concern should be making sure you have enough income to cover your expenses so you can live the lifestyle you choose.  Whether that income comes from social security benefits or wages will not really matter.  In general you are looking at total income (from both sources) versus total expenses. 

Your living expenses will determine if you have enough left over to maximize your 401(k) contributions.  Continuing to contribute to a 401(k) is a great way to reduce your taxable income.  In addition, if you are actively contributing to a 401(k) you will not be required to begin taking Required Minimum Distributions (RMD's) from that account.  It will not change your RMD requirements from your other smaller 401(k) though.

Contributing to your 401(k) will reduce your taxable income in two ways.  First, it will reduce your taxable wages.  Secondly, it will reduce the amount of other income used to determine how much, if at any at all, of your social security benefits will be taxable.  So, continuing to contribute to your 401(k) will be beneficial to you.  How much you contribute should be guided more by making sure you are living a comfortable lifestyle and are able to cover your expenses, rather than which source of income you are using to do so.