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Most people who qualify to start receiving social security benefits are in fact starting as soon as possible at the age of 62.
If they start collecting without advance planning they could end up missing out on thousands of dollars they could have been entitled to.
Here are four steps that one should consider before drawing their first check.
IRA distributions are usually taxed as ordinary income, while money taken from Roth IRAs is almost always tax-free. Unlike IRAs, Roth IRAs have no mandatory distribution age.
Selling an appreciated asset now ensures the gains won’t push future Social Security payments into taxation. You may benefit from both a higher sale price and a lower capital gains tax rate today than what they might receive later on.
The penalty for working and collecting is even more onerous for those under “full retirement age” (66 years old for those born between 1943 and 1954). In 2010, Social Security recipients under FRA lose $1 in benefits for every $2 over $14,160 that they earn.
Delaying taking benefits certainly allows you more time and flexibility to evaluate and complete the aforementioned moves. An even bigger benefit will come from the higher check you eventually receive.
In the case of a prior marriage you may receive Social Security benefits based on someone else’s earning history if you were married at least ten years.
Daniel Iuculano
