How Much Tax Withholding Should I Have Taken Out Of My Paychecks?

Jan 17 2017 - 7:00am

Hi Larry,
I am 50 years old and I work two part time jobs. How much tax deduction should I have to take out from my paycheck every two weeks so I can have higher social security benefits when I retire?

Hi,

Your Social Security retirement benefit rate will be calculated based on your highest 35 years of wage-adjusted earnings (https://www.ssa.gov/pubs/EN-05-10070.pdf), not the amount of tax withheld. The current standard Social Security tax rate is 6.2% for employees plus a matching 6.2% from their employers. Self-employed people must pay the whole 12.4% themselves, although they receive a tax credit that offsets part of that amount.

The Social Security tax rate is not a variable that you can control, and the amount of income tax that you have withheld is irrelevant with regard to your future Social Security benefit rate. The only way to increase your future Social Security retirement benefit rate is to increase the amount of earnings on which you pay Social Security taxes.

Best, Jerry