CPA & Business Advisory Blog

social security

When and How to File for Social Security

What to Look For

Individuals nearing retirement age face a difficult decision about when to begin collecting Social Security benefits. There are so many variables that go into the decision that it is often put off or made without any real planning.

Anyone nearing the retirement age (as young as 62 for early retirement) should begin considering all of the possibilities for the time at which benefits are claimed.

The Opportunity

It is critically important to review your financial situation before claiming benefits. In that regard, you should consider the following:

  • How much the reduced benefit from early filing might cost after considering the Delayed Retirement Credits
  • The impact of delaying benefits beyond full retirement age on survivor benefits
  • How Social Security benefits will be taxed, particularly if you have assets in qualified retirement plans

Planning for spousal benefits is even more complicated. In doing so, you should consider worker benefits, spousal benefits and survivor benefits.

Since you or your spouse will now be covered under Medicare, it is also wise to have a professional review your Medicare benefits options during open enrollment, as there are multiple choices to make, and each one can have a financial impact.

The Benefit

Proper planning can have a dramatic impact on benefits. For example, consider how delaying Social Security can benefit a surviving spouse:

Chart 1

Additionally, income taxes can be minimized. Consider the following example:

Using one approach, you would take reduced Social Security payments early and supplement those with higher IRA withdrawals. With an alternate approach, you would just delay your Social Security payment.

Chart 2

There are many other meaningful ways to stretch your dollar in our new e-book: 12 (More) Great IdeasDo you have a question about how this information applies to you? Email Jim Sacher, CPA or call him at 440-449-6800.

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