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I have an online blog that I don't use. It generates some money through ads but not enough for me to spend time on it. My mother wants to take the blog and maintain/update it herself and receive the revenue.

She is currently 65 and wishes to retire at 66. She does not earn much money, less than 20K per year. The blog would bring her less than 10K per year in additional revenue. She lives in California & does not have any savings for retirement. Her plan was to live off her basic public pension, which I imagine would be very minimal, less than 12K I assume.

My question is, how will the extra blog revenue affect her pension once she retires next year. Would she receive a lower public pension because she's receiving extra revenue? I'm in Canada so I know nothing about how things work there so I was hoping to get some info before getting her hopes up that this would beneficial to her.

Thanks

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By "basic public pension" I assume you mean Social Security, which is pretty much the only quasi-universal pension-like thing in the USA. If she has any other sort of pension (e.g., from a job) you'd need to get more specific info about that.

As for Social Security, as described here:

While you are working, your earnings will reduce your benefit amount only until you reach your full retirement age.

According to the calculator on that site, if she is 65 now, her full retirement age would be 66, so if she retires after that age her SS benefit won't be reduced due to extra income.

As described here, if she has considerable income apart from SS, she may have to pay taxes on her SS income. This would not reduce her income, but means the benefit of her extra blog income would be reduced. This page describes how to calculate your "provisional income" to determine whether SS benefits will be taxed. According to that page:

If your provisional income is less than $25,000 for single or head-of-household returns, or $32,000 for joint returns, then your Social Security benefits will not be taxed.

Based on the numbers you gave, this suggests she would not incur an SS tax. However, she should probably take a look at the Social Security retirement estimator and other tools on that site, if she hasn't already done so, to get a sense of what sort of income SS will be providing her.

I'd suggest that she talk to a retirement planner and/or CPA to get a handle on what her finances would be like. At the least, she should find someone knowledgeable about Social Security policies and tax issues in the USA. As you say, you are unfamiliar with the way these matters work in the USA, so your ability to help her make financial decisions is limited.

  • Thanks for the detailed information. This is exactly what I needed to get me started researching further. – camilos Jun 4 '14 at 1:23

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