Question about pay and per diem?

I generally refuse to allow a employer to profit off me using Per Diem.

However that is water under bridge. Today I cannot use much if any perdeim at all under w2.

Pay me boss. Call it 10 cents a mile to match the daily rate of the old Per diem. 600 miles times 0.10 = 60 dollars food money.

 

It's a bad thing if you want expect the government to take care of your life insurance (ssi), disability insurance (ssi) and retirement (social security). It's a bad thing if you think that the more you can borrow, the better your life will be.

It's a bad thing if you take the extra take home pay and blow it on a weekend in Vegas.

If you are an adult and set some of that money aside for retirement investing, life and disability insurance, and save some for purchases so you don't have to borrow (or borrow significantly less), then it is a much better financial choice.

 

In a perfect world, [for younger and middle aged drivers who have a company per diem option], the tax withholding "saved" should be redirected to a 401k plan. This would offset the reduction in your SSI contributions and potential SSI retirement benefit reductions (assuming it will be there at all 30 years from now).

But older company drivers who might be close to retirement, they should get off a company per diem plan ASAP to "raise" their earnings used in the SSI eligibility testing time frame

How Are Benefit Payments Calculated?

https://www.ssa.gov/pubs/EN-05-10070.pdf

 

Social security is averaged over your best 35 years. The difference would be extremely small by not taking the per diem over any amount of years, compared to the far greater savings one would receive tax wise and invest that amount on your own. No contest, take the per diem, whereas working additional years beyond your first date of eligibility before taking social security would have a far bigger impact on amount received.

In other words, take the per diem as a W2 employee regardless of where you stand on age.

 

I remember when my dad (business owner) was a few years from retirement age, his (and company's) accountant told him to take as much salary as possible [up to a limit threshold] in the last working years. Yes, they look at all years but they also place special weighting emphasis on the highest earnings years (the last working years typically for most)

 

Social security earnings are adjusted for inflation by what they call indexing for inflation. Use the retirement calculator on the SSA site to see how much your later years of taxed income makes a difference. I guarantee it won't nearly be as much as taking your per diem and investing that money saved from taxation.

And no, your later SS years have no greater weight than earlier SS years when calculating your SS benefits. Only that often later years of your working life are often the greatest amount you will make after adjusting earlier years for inflation. But this still is small compared to what you save in taxes from taking the per diem.

 

That's the good news. The down side to per diem is it lowers your taxable income so you pay less money into Social Security and the money you get via per diem is not considered income to banks and other financial institutions. As others have pointed out, it will reduce your chances of getting a loan approval.

 

Word of advice on borrowing money. Don't do it. Don't become enslaved to debt. Instead save and let money/invested become enslaved to you. Nothing like financial freedom.

 

Others are wrong ... Former loan officer and daughter is an underwriter. Anything that is normal and standard for an industry will be considered as income.