<p>If parent retires and only income is social security and a government pension does fafsa look at that money as income? HOw does that affect fafsa?</p>
<p>Government retirement income is part of the adjusted gross income in your taxes, so I believe it will be considered in FAFSA.</p>
<p>ANY taxed income is included. Untaxed social security income is not, though, for FAFSA. Profile schools <em>may</em> consider it.</p>
<p>I have yet to start any retirement account, and I am 47. I'm wondering if I should put any money into an IRA now, as college approaches, or wait until son is out of college.
I'm self employed, with no life insurance.</p>
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Government retirement income is part of the adjusted gross income in your taxes, so I believe it will be considered in FAFSA.
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Govt retirement income does not become taxable until other income exceeds a certain amount. (one of the usual weird formulas has to be used to figure out whether it is taxable). My husband is receiving his SS pension and our other income is not high enough so none of the SS pension is taxable. Prior to this year the untaxed SS pension had to be reported on FAFSA so was considered by FAFSA. This year it does not have to be reported so is not considered. Any that is taxable and in the AGI would be considered.</p>
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I have yet to start any retirement account
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<p>Max out IRAs or SEPs starting now, despite the approach of college for your son. Retirement and college are two very different and separate questions. Take care of your retirement first.</p>
<p>RUN don't walk to buy a 5 year term life policy to cover yourself until your son is out of college.</p>
<p>Any money put into an IRA before taxes is added back into your available income for Fafsa, but the amount in the IRA is not considered an asset</p>
<p>Not sure how IRAs work for self employeed</p>
<p>Funds in a retirement account will not be used as part of your asset calculation for FAFSA, thus lowering your EFC as compared to money held in a bank account (savings, mutual fund, etc) correct?</p>
<p>Correct. The balance in the accounts is not taken into account by the EFC formula. However current year contributions are added back to income in the formula (assuming they are the type that are deducted from income in the first place, rather than Roth contributions).</p>
<p>Swimcat, My earlier comment referred to gov't pensions, not SS. Military retirement documentation for taxes arrives as a 1099 and is part of AGI.</p>
<p>Oh - sorry, I misunderstood.</p>