The Stream
Page 4 of 8
Lifestyle
Social Security & Retirement: Maximize Benefits while Minimizing Taxes
As our general population is getting to the retirement age faster than we could imagine, I thought this
would be an ideal subject to deal with in today’s economy.
Waiting to collect Social Security Benefit as long as possible is good. You can start collecting as early as 62,
but the full retirement age for people who are now in their 60’s is age 66. If you choose to retire at age 62
instead of age 66, you are going to get only 75% of your full benefits. But for each year you wait beyond
66 not only you get 100% of your benefits, you get an additional 8%. So, if you can hold out to age 70, you
are going to get 132% of your full benefits. By retiring at age 70 instead of age 62 you are going to get
76% more in your monthly paycheck than you otherwise would.
Prince Zacharia, CPA
For couples, it is a little more complicated. Once your spouse has started to receive benefits, you can claim on your spouse’s
record. You can then get 50% of your spouse’s benefit and then and not claim on your own. During this time, you are earning
this delayed retirement credit on your own benefit, then you can switch over, let’s say at age 66…at age 70, switch from this
relatively small spousal benefit to this now much higher benefit based on you own earnings.
For People who are collecting benefits and below their full retirement age, below 66 today, if they earn more than a certain
amount their social security benefits will be reduced. And the threshold today is about $15,000. So, for every two dollars that
you earn above that level, above $15,000 they are going to lose one dollar in Social Security benefits. However, after the full
retirement age, after 66, you can earn as much as you want. It will have no impact on your social Security at all
The tax code related to Social Security benefits is incredibly
complicated, and it is a huge headache to deal with. However, if
you plan it right, you won’t have to pay much tax at all in
retirement. It is a great feeling to keep more of your money
when you need it the most. The average monthly Social Security
Benefit for a retired worker was about $1,230 a month if you
worked and paid taxes for at least 10 years.
. - cont'd on p. 6
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