Dear Rusty: I’m 63 and retired from work, but not drawing Social Security. I have accumulated just over $300,000 in my rollover 401(k) IRA. My wife is still working full time, so we have medical, dental, and vision coverage. I have a few questions: 

1) When I take IRA distributions throughout the year, do those dollar amounts get reported to the Social Security Administration as income? 

2) If not, will my Social Security benefit change (will I be penalized?) for not working and having zero income as I continue to withdraw investments and show no income? 

3) If my benefit will drop because of the last few years of no income, would it be advisable to start drawing Social Security now? 

Signed: Planning Ahead

Dear Planning Ahead: Whenever you decide to claim Social Security, the agency will compute your benefit amount from your lifetime earnings history. It will adjust your earnings for inflation in all years prior to the year you turned 60, finding the 35 years in which you had the highest (inflation-adjusted) earnings, and use that “average indexed monthly earnings” (AIME) amount to determine your Primary Insurance Amount (PIA), which is your benefit entitlement at your full retirement age (FRA). From there, your age when you claim determines your final Social Security payment amount. Born in 1958, your FRA is 66 plus 8 months, and that is the age at which you will get 100 percent of your PIA. If you claim benefits before your FRA, your payment will be reduced; and if you wait until after your FRA to claim your benefit will be increased. If you wait until you are 70 to claim, your Social Security payment will reach maximum (about 27 percent more than your FRA benefit amount). Now, to your specific questions: 

1) Distributions taken from your 401(k) or IRA are not reported to Social Security as “earnings” and do not count toward your Social Security benefit entitlement. 

2) If you have already retired from working, having zero earnings now won’t further affect your final Social Security payment amount because your benefit will be based upon your 35 highest-earning years. However, if you have a recent benefit estimate from Social Security, that estimate assumed that you would continue to earn at the same level you most recently reported to the IRS until you reached your FRA. So, if you got the estimate while you were still working (or shortly thereafter), the estimate is higher than your actual benefit will be. If you received the estimate a year or more after you stopped working, the estimate is more accurate. In any case, your 401(k) withdrawals will not count as Social Security earnings. 

3) Claiming now would result in a permanently reduced Social Security benefit amount because you haven’t yet reached your full retirement age. But claiming now wouldn’t be a hedge against your current lack of earnings because your benefit will be based upon the highest earning 35 years over your lifetime. 

If you don’t already have a full 35 years of Social Security-covered earnings the agency will still use 35 years in the benefit calculation, adding $0 earnings for enough years to make it 35. If that is the case, you could offset some of those zero years in your lifetime history by returning to work now, thus increasing your benefit when you claim. If you already have at least 35 years of earnings, enjoy your retirement.

One last thing to consider: if you predecease your wife, at her FRA, she will be entitled to 100 percent of the benefit you were receiving at your death (if that is more than her own). In other words, when you claim your benefit will affect the amount your wife can get as your widow. The longer you wait to claim, the higher your wife’s survivor benefit from you will be.

Russell Gloor is a certified Social Security advisor with the Association of Mature American Citizens (AMAC). The 2.3 million member AMAC says it is a senior-advocacy organization. Send your questions to: SSadvisor@amacfoundation.org.

Author note: This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained and accredited by the National Social Security Association (NSSA). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity.

As a leadership-development specialist and certified executive coach, I work with leaders who are interested in scaling their leadership. Scaling leadership is defined as building organizational capacity to create outcomes that matter most. The scope of development is typically in three focus areas: 

1. The leader as an individual 

2. The leader’s team(s) 

3. The organization the leader works within. 

The interest for this “scaling of leadership” is in results; the results must matter, which is as much about purpose and meaning as it is about hard and fast metrics such as profit and loss.

This type of leadership is plentiful in our world today, despite the polarized political landscape. Focusing on the “big stories” is a recipe for missing the groundswell of initiatives and efforts being conducted all over the world by people making a difference in their communities, families, and jobs. It need not take a nation’s or state’s leader, a CEO, CFO, or other C-suite executive to scale leadership. Instead, it takes an individual with courageous authenticity.

A quick glance at the headlines or a breeze through YouTube’s “trending news stories” will often result in a story about politically playing it safe, purposely polarizing or attempting to reinforce ego than authentic leadership. These are not examples of authenticity, and in today’s landscape of sensationalized stories, we rarely know what is authentic and what’s not. 

Being authentic is not always received as agreeable or popular. As a matter of fact, it seems that to simply think differently in today’s world will likely offend more than it will align. At some level we know this to be true, and we therefore listen to our inner critic and play it safe by not sharing our complete voice. We comply to be emotionally and socially safe, and complying, while sometimes the appropriate response, can have significant limitations, may stifle creativity, and will come at the cost of our authenticity.

What can we do? Are we simply to speak up more and voice our thoughts? Are we supposed to not care, or care less? 

I’d like to take a cue from Star Trek here. The prime directive of the crew of the Enterprise was to do no harm. They were “prohibited to interfere with the internal and natural development of other cultures and civilizations” while they explored. Yet Captain Kirk broke the prime directive 11 times to date. Leadership is messy. Kirk wasn’t out to break the rules, but he knew that he could not get results without being boldly authentic. 

When Kirk broke the prime directive, it was always to achieve some greater good. It was never for greed or personal gain, never for the gain of his people over another … and in fact, quite the opposite, as he often put himself, his ship, and his crew at personal risk.

Should he have complied more often? That’s typically the dividing question between Kirk fans and Kirk critics. But without authenticity of leaders, much is at risk.

So for those of us leading here on Earth, what to do?

1. Surround yourself with good relationships. Don’t surround yourself with people who will necessarily agree with you all the time. Rather, find the people who will: a) trust you, b) validate you, and c) disagree with you toward a collaborative solution — not an antagonistic fight or dissonance (or even worse, to simply be rooted in their feelings of being offended).

2. Get in touch with what you really believe and think. Be aware of your internal assumptions and challenge them. We cannot be always guaranteed favorable results by being authentic, so we are constantly making “risk and reward “calculations to gauge our behaviors. These calculations often start with our internal assumptions, the beliefs we use to organize our identity. We follow them like inner rules that help define how we see ourselves and our relationships, but they are not always aligned with what we truly think, know and believe.

3. Practice. Just keep practicing your authenticity. It’s like a muscle and for many of us, it is atrophied. As you gain more clarity of what it is you know to be true, practice it with self and others.

It takes courage to be authentic — the type of courage that allows us to take some risks and the type of courage we call upon when there is ambiguity and uncertainty. I write about being more authentic because I have been playing it safe for most of my life. Playing it safe, in part, is authentically me. I value relationships and most of all, doing no harm. However, when my values, my voice, or my needs are self-sacrificed, I am not doing well. And like you, I want to do well. I want to scale my own leadership, so I can continue to help others scale theirs.                       

Bill Berthel is a partner with Emergent, L.L.C., a provider of executive coaching and leadership training, based in Syracuse. Contact him at Bill@GetEmergent.com