On the Money is a monthly advice column. If you want advice on spending, saving, or investing — or any of the complicated emotions that may come up as you prepare to make big financial decisions — you can submit your question on this form. Here, we answer two questions asked by Vox readers, which have been edited and condensed.
I immigrated to the United States just two years ago. I have retired in my original country and have a pension and some savings, but I feel that this money is not enough to support our future retirement life in the United States. What should I do?
I am enough of a personal finance expert to know that if you do not have enough money to support your future life, you’re going to need to figure out how to earn more money.
Unfortunately, I am not enough of an immigration expert to advise you on the different ways in which you might be able to earn more money — so I reached out to Ellen Sullivan, owner and attorney at Cambridge Immigration Law.
“The first thing you need to understand is whether you have the legal right to work in the United States,” Sullivan told me. “Then you need to look at whether your work permit comes with any restrictions.”
Sullivan, who has been practicing US immigration law for 19 years, explained that many lawful permanent residents have unrestricted work permits that allow them to work anywhere. “Some people have work visas that tie them to a particular employer, but many people have the ability to work wherever they choose, or wherever they can find a job. You could work in an office or you could work at Walmart.”
You may also want to consider other ways of generating income, such as investments. “People can invest in the United States regardless of their immigration status,” says Sullivan. “This includes investments in property and real estate.”
If you have the ability to invest in real estate — which may or may not be an option for you at the moment — you might be able to earn additional income by renting out your property. “Becoming a landlord is considered an investment and not a job,” Sullivan explains. “This means that you can be a landlord without a work permit.”
Regardless of how you choose to earn income, you’ll want to ensure that you follow any applicable tax laws, both in the US and in your original country. “Any income you earn in the United States can be taxed,” says Sullivan, “and you may also be subject to tax requirements in your home country.” It could be worth talking to a tax professional about your potential tax obligations, especially if you are unclear about what you might owe.
I also asked Sullivan what an immigrant might want to know if they were thinking about working under the table. She explained that there were two separate issues in play here — the first being the work itself, and the second being the taxes you may be required to pay on your earnings. “If you choose to work without permission or if you choose to ignore your tax obligations, these are civil and criminal violations,” she said.
Many people earn money through informal, quasi-legal jobs — the nanny or tutor who is paid in cash, for example — and many people assume that this kind of work does not need to be reported to the IRS. This is an incorrect assumption, and it could hurt you in the long run. You need to file tax returns with the IRS every year, even if you are an undocumented immigrant working an informal job.
There’s one more factor to consider as you plan the next phase of your life in the United States, and that’s whether you need to move to a lower cost-of-living area. I don’t know where you are living, or whether you want to stay where you are to be close to family or community, but relocating to a less expensive part of the country could allow you to live on your pension and savings without having to get another job. That said, many US adults continue working, in some capacity, even after they retire — so your situation is neither unusual nor atypical.
In other words, welcome to America.
Read more from On the Money
Do you have questions related to personal finance? Submit them here.
I’m 65 this year. I want to know if I will be penalized if I invest in stocks, bonds, or any other kind of investment while on Social Security Disability?
As far as I understand, you probably won’t be penalized if you invest while on Social Security Disability — but once again, this is a question to which I need to appeal to the specialists.
“You can definitely invest while on Social Security Disability (SSD),” says Andrew Latham, a certified financial planner who shares financial insights at SuperMoney.com. Latham explained that investment income is generally not considered “earned income,” which means it won’t affect your SSD benefits.
That said, you may still need to keep track of your total assets. “If you’re also on Supplemental Security Income (SSI), be aware of strict asset limits: $2,000 for individuals and $3,000 for couples,” Latham told me. “You can still invest, but if you do well and earn more than the asset limits, it will probably reduce or disqualify you from your SSI benefits.”
I asked Latham if putting money into investments would remove it from your total asset pool. If you were an individual with $3,000 in assets, for example, could you invest $1,000 and retain your SSI benefits? Latham said no. “Investing excess assets will typically not help with SSI, since the principal amount of investments, including stocks, mutual funds, savings bonds and so on, do count as assets.”
I also had a conversation with Jim Wang, owner of WalletHacks, who I consider a go-to resource for these kinds of questions. “I did research into this topic when I was helping my parents as they started collecting Social Security benefits,” Wang explained. “The Social Security Administration, on their website, states that they only include wages from your job, net profit from self-employment, bonuses, commissions, and vacation pay. They don’t count pensions, annuities, investment income, interest, veterans benefits, or other government or military retirement benefits.”
So far, it’s looking like you should be able to invest while on Social Security Disability without running into any penalties — but there’s one more detail you may need to be aware of.
“In order to put money into an IRA or Roth IRA, you must have earned income,” says Marc Barnes, an enrolled agent and family office director at Copper Canyon Tax and Accounting Services. If you don’t have earned income — and many people on Social Security Disability do not — you can still invest in a brokerage account. However, you may need to prepare for the tax implications.
“There is no tax deduction on a brokerage account, and the earnings, interest, and dividends that are produced will hit your tax return and could result in an increase in taxable income,” Barnes explains. “Brokerage accounts aren’t bad, but too many advisors are using a cookie-cutter approach to investing and the client ends up with too much taxable activity hitting their tax return and that is totally unnecessary.”
Bet you’re wishing I’d stopped my advice column a few paragraphs ago, right? Unfortunately, it gets even more complicated.
“If disability is your only income, then a few dollars of interest or dividends isn’t really going to affect you. It would most likely be taxed at 0 percent and wouldn’t be enough to make your disability or Social Security taxable,” Barnes told me. “If you are married and your spouse has income, then you are probably already paying tax on disability or Social Security income and more consideration should be given to the investments.”
There you have it, 65. Yes, you can invest; no, you probably won’t be penalized; and yes, you should be sure to consider the potential tax implications before making any investments.
And, as I always remind people — don’t invest any money you can’t afford to lose.
