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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1490  
Subject: Re: IRA Date: 7/23/2007 10:15 AM
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Still, is the basic concept sound? The last few year's contributions will not earn a lot unless you get really lucky in a self directed account. Would artifically inflating your wages to increase your tax by $4000 or $5000 dollars for two or three years produce a greater lifetime return than would be realized with that money in mutual funds or CDs?

It depends.

First - the OP is retired. To implement your idea, they need to start a business, which may not be something they are interested in dealing with at this point

Second - the business would have to make enough profit to increase their income to pay $4k - $5k in taxes. With many start-up small businesses, this would be questionable at best, unless they were to ignore deducting of some deductible expenses.

Third - if the income is increased enough to pay $4k - $5k in taxes, it is likely that the income itself is going to bring them more renumeration than any increase in SS would.

Fourth - if the OP already has 35 years in creditable income, they would have to make more in indexed income than any of the previous 35 years in order for any increase in SS to occur.

Fifth - it's pretty much a moot point to compare paying $4k - $5k in income/self-employment taxes to contributing it to an IRA, because with no earned income, the OP is ineligible to contribute to an IRA anyway, as the first several replies to the original post indicated.

Personally, if I had made the decision to retire, I wouldn't want to start up a business solely to increase my SS earnings. I would want to be retired.

AJ
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