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LawTalk
LawTalk, Attorney
Category: Social Security
Satisfied Customers: 35309
Experience:  I have 30 years of legal and litigation experience, including representing clients before the U.S. Social Security Administration.
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I'm 68 years and 3 months old. My wife is 3 years and 8

Customer Question

Hello I'm 68 years and 3 months old. My wife is 3 years and 8 months younger than me. Neither of us are taking social security yet. My wife has been a housewife and will benefit the most by taking 50% of my SS benefit. I plan to retire in 5 months and am thinking of living off my IRA and/or 401K until I'm 70 letting my benefit maximum, but I'm not sure that is the best plan. I've been contributing (along with my employer) the maximum amount of FICA for the last 8 years. I've heard my benefit is increasing at a rate of 8% per year until I reach 70 at which time it stops increasing. My question is does that rate of increase remain the same regardless as to whether I am still working and contributing to it? Does the rate of increase vary depending on how much one contributes in to the fund? Also, if I elect to wait, and live off my IRA will I have to pay FICA on that as well?
Submitted: 9 months ago.
Category: Social Security
Expert:  LawTalk replied 9 months ago.

Good morning Guy,

I'm Doug, and I'm sorry to hear of the confusion. My goal is to provide you with excellent service today.

You asked: My question is does that rate of increase remain the same regardless as to whether I am still working and contributing to it? Yes, so long as you are not taking your retirement benefit from social security---whether you are working or not----your benefit will increase by 8% per year between age 66 and 70.

Does the rate of increase vary depending on how much one contributes in to the fund? No, the rate of increase is level at 8%. However, if you are still paying into social security because you are still working, then your additional income you are earning each year also may have a relatively small effect on your ultimate benefit. As an example, for every $50,000 you ear each year, your benefit will rise on average about $18.00.

Also, if I elect to wait, and live off my IRA will I have to pay FICA on that as well? No, you do not pay FICA on your IRA because you paid the FICA portion of the tax when you put the money into FICA.

Your best strategy at this point would be for you to file and suspend your social security retirement benefit before April 30, 2016. This will allow your wife, when she reaches 66 to file a restricted application for a spouse benefit and then she can receive 50% of your full retirement age benefit while both of your own retirement benefits continue to grow by 8% per year until you reach age 70, or choose to take your retirement.

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

Please be so kind as to rate my service to you. That is the only way I am credited for assisting you.

I wish you and yours the best in 2016,

Doug

Expert:  LawTalk replied 9 months ago.

Good afternoon,

Do you have any additional questions that you would like me to address for you? In case you would like a phone call to further discuss these issues you have raised, I will make that offer to you. You are certainly not obligated to accept a call offer, but many people do find it helpful for clarification purposes, as well as to allow them to ask additional questions.

If I have provided you with the information you were seeking, would you please now rate my service to you?

Thanks in advance,

Doug

Expert:  LawTalk replied 9 months ago.

Hi Guy,

I have a minor a correction from an earlier paragraph:

Also, if I elect to wait, and live off my IRA will I have to pay FICA on that as well? No, you do not pay FICA on your IRA because you paid the FICA portion of the tax when you put the money into your IRA.

Please understand that in order for me to be compensated for having helped you, I need for you to positively rate my service to you by clicking on the rating stars---three stars or more. It is that easy.

Thanks in advance.

I wish you the best,

Doug

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