Maximum Taxable Income Amount For Social Security (FICA)

Uncle Sam The Tax ManFICA stands for Federal Insurance Contributions Act and consists of a Social Security tax and a Medicare tax. This tax is very important for everyone to understand because so often we only think about federal tax rates and state income tax rates. The FICA tax is a big percentage of your total tax bill, especially for those making under six figures a year.

When I was making big bucks in finance, the tax bill was equally big bucks. The only saving grace was seeing my after tax paycheck increase after the maximum taxable income threshold for Social Security was breached each year. The tax amounts were jolting based on how inefficient the government was and still is with regards to spending our money.

For 2015, the maximum amount of taxable earnings for Social Security rises to $118,500 from $117,000 in 2014. In other words, an employee must pay 6.2% of any income up to $118,500 for 2015 = $7,347. But any dollar you make above $118,500 is free of the Social Security tax. Hence, a good goal for everyone is to make as much as they can over $118,500 as possible, right?

Not so fast. Given we have a progressive tax system in America with Alternative Minimum Tax (AMT) and deduction phaseouts, I’ve calculated that the optimal Adjusted Gross Income is roughly $250,000, +/- $50,000. At $250,000, $131,500 of the earnings is free from the 6.2% Social Security tax. Meanwhile, you still get most of your mortgage interest deduction, and only have to pay a slight amount of AMT, depending on the person. A $250,000 income is also high enough to live relatively comfortably in any part of the world.

Some might argue that the Social Security tax is regressive because it caps out at $118,500 in 2015. Why shouldn’t rich people pay more? Here’s the thing people might not understand. Social Security benefits cap out based on the maximum amount of Social Security tax contribution as well. It’s not like someone who is making $500,000, and not having to pay the 6.2% Social Security tax on $381,500 of his earnings is getting extra benefits based off his $500,000 income. He’s just getting the maximum Social Security payout amount when it comes time for him to collect based on the maximum taxable income amount he contributes.

The $500,000 income earner is already paying the highest marginal federal tax rate of 39.6% plus state taxes, if applicable. 

Make More Money, Save More Cash, Grow Your Net Worth Now!

Big Goals by Sergiy MatusevychHappy New Year Everyone!

I hope everybody is locked and loaded to get… loaded again in 2015! It’s somewhat arbitrary to set goals at the beginning of each year, but there’s no use fighting the power. The beginning of the year is when a large amount of assets get deployed into various investment classes. The beginning of the year is also when companies aggressively hire and spend their budgets. And the beginning of the year is when everybody is full of hope.

You want to be front and center!

Let me first discuss five basic and important financial goals everybody should achieve. I’ll then highlight my personal goals for 2015.

The Rise Of The Chief Content Officer: The Next Hot Job Of The Decade

Raygun Rocketship SFEvery year I tend to discover one significant thing that fish-slaps me in the face based on some sort of experience. This year, it’s the realization of the next high demand job of the decade.

You know how computer science and software engineering jobs have become all the rage over the past 10 years? I predict that any job that has to do with creating content online is going to blow UP in 2015 and beyond. For those of you still in college, take as many classes on web development, creative writing, and online marketing as possible. For others who are looking to switch careers, now is the time to build your resume and take the leap if you like this field.

The most senior of these content-related jobs is Chief Content Officer, followed by Director Of Content And SEO, and Director Of Engagement And Social Media. For the past 12 months I’ve been intimately involved in developing a content marketing strategy for a financial technology company. I’ve edited, written, sourced, curated, SEO optimized, and help grow the company’s brand online through their blog and social media channels. Brand awareness has gone up, marketing costs per result has gone down, and lead generation has grown. Such a job is slowly beginning to pop up all over the place.

A company can no longer just have a website to do business. A company must also have a coherent and effective content marketing strategy. Every single startup or established firm will be hiring a Chief Content Officer or Director Of Content soon enough. This bodes well for struggling journalists or editors of traditional media companies who have been hollowed out due to the desecration of offline content consumption. The natural path is for senior management to hire such journalists and editors due to their pedigree.

But I argue there is someone even better to fill the CCO role: the pro blogger who has organically built a brand from the ground up and displays the combination of creativity plus business savviness.

Investment Lessons From The Most Profitable Trades Of 2014

Investment Lessons Learned by AjariOne of the 10 misses in my 2014 year in review post was missing out on some great investments. I truly believe there are fortunes to be made every single day if we look hard enough. The problem is, we all get busy with our lives and don’t really bother.

Part of the reason why investors hand their money over to professional money managers is so that they at least know someone is spending their working hours trying to make them money, even if it is for a fee. The busier I get, the more amenable I am to farming out more money to people who pick stocks for a living. That said, I’ll never stop chasing unicorns.

Take a look at a pretty sweet infographic created by Motif Investing on some of the most profitable investment ideas of 2014. We’ll then discuss some investment lessons at the end of the post. The benchmark comparison is the S&P 500, which has returned roughly 13% YTD.

Financial Samurai Personal Year In Review 2014

Financial Samurai Year In Review Happy Holidays Everyone!

Year in review posts are one of my favorite posts to write because we tend to forget some of the things that happened in the first half of the year in favor of things that happened in the second half of the year. This type of cognitive bias is the reason why if you must slack off at work, you might as well do so from January – June and really shape up afterward. Almost every single company I know decides on bonuses and promotions in the second half.

I hope all of you have read 10 Helpful Financial Moves To Make Every Year, and checked off at least five of the ten items by now. I promise you that if you can go through all ten items, you’ll be ahead of 99% of the population when the chaos begins again.

Here’s a post about some things that went well, and some things that didn’t go so well this year. Surprisingly, it was pretty easy to find 10 of each. 

10 Helpful Financial Moves To Make Every Year

Financial Moves To Make To Get To Santorini

Cheers to the best time of the year!

The end of the year is always the best time to reflect and plan. I’d like to share several financial moves you should make before the new year in order to protect your wealth and hopefully grow your wealth in a risk-adjusted manner next year.

Those of us who invested in stocks, real estate, and many other asset classes except for oil should be feeling fortunate. But don’t forget that good times seldom last forever. Never forget the Armageddon days of the 1997 Asian Financial Crisis, the 2000 dotcom implosion, and the housing + financial meltdown that began in 2008. Those of you who haven’t been investing at all better get ready to deploy capital when chaos returns, or else inflation will eat your wealth alive.

If you just started investing in the past five years, lucky you! Don’t worry. Your beat down will happen eventually. But like every beat down, things always get better over time. Look at all of us old farts who are still around.

Losing A Property Bidding War Never Felt So Good

Amazing property

Bring the Grey Poupon

It took about three months of intense searching to find my new home in the western portion of San Francisco largely because I was unfamiliar with the area and price points. Every house I saw looked cheap compared to where I used to live, hence I needed time to recalibrate my thinking. I must imagine Californians retiring to places like Florida, Texas, Washington, Nevada, and Oregon must go through the same recalibration process since everywhere is so much less expensive.

During my house hunt, I met a number of realtors. Some were good, some were clueless. There was this one fella I met who happened to be the listing agent along with his mother of a house I wanted to buy (mother son team). It was a great 2,200 square foot, 4 bedroom/4 bathroom house with two levels of decks overlooking the ocean. The house was perfect for $1.2 million.

San Francisco is currently no ordinary property market. Prices are purposefully set low in order to attract a bidding frenzy unlike many other real estate markets where prices are set high and negotiated down. Instead of earning his cut from his mother for selling the house with her (a sure thing), he agreed to represent me in the purchase of the house. It was a gamble he decided to take probably due to a little more money, his belief that he could convince his mom to sell to us, and to earn a good win for his own real estate resume.