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dylatess
dylatess, ATTORNEY
Category: Social Security
Satisfied Customers: 3427
Experience:  37 plus years of SSD practice
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When should I apply for SS, I am 66 (04/26/1950) and still

Customer Question

when should I apply for SS
JA: The Retirement Accountant will know how to help. Please tell me more, so we can help you best.
Customer: I am 66 (04/26/1950) and still working. Income about $140K. My wife is 62 and does not work. We file income taxes jointly. When is the best time to apply for SS?
JA: Is there anything else the Retirement Accountant should be aware of?
Customer: no
Submitted: 1 month ago.
Category: Social Security
Expert:  Lane replied 1 month ago.

Hi.

...

My name's Lane. I can help you here.

...

First to lay the foundation (much of this you may know), the latest age that generates the 8% Delayed Retirement Credit for waiting is age 70. Those that wait from full retirement age (age 66 for those born between 1943 and 1954) until age 70 add 32% to ther Full Retirement Age benefit.

...

Secondly, those that take their benefit early (age 62 for those born between 1943 and 1954) have their benefits reduced by 25% below what their full retirement age benefit would be.

...

Another factor is taxation (although not the large factor that some make it out to be - until taxes reach 100%) - let's not let the tax tail wag the dog, so to speak.... BUT another part of the analysis

...

No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. But for joint filers, when and you and your spouse have a combined income* that is

  • between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
  • more than $44,000, up to 85 percent of your benefits may be taxable.

...

*Note:

Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your "combined income"

...

So as you can see, one scenario that could have the taxes be a larger factor here, is waiting to take benefits until ater you earned income is no longer there (lowering that "combined income number), AND adding 8% to what you will receive (for every year you wait)

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There are two more high level (overview) issues:

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You said your wife does not work but you didn't say whether she has any work-record so that she could apply on her own benefit. If she does not, then when she takes the spousal benefit (1/2 of your full retirement age benefit) benefit is really the only issue ... as that will also be reduced for taking at 62.

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And if she was not born on Jan 1 1954 or earlier, she can no longer (since the bi-partisan budget act last year) file for spousal benefits only and let her oqn benefits grow

...

That last issue is longevity.

...

The effect, benefit, of delaying past age 66, for you really depends on your expected life expectancy. Having 100% of your Full Retiremeng age benefit for an additional four years if you die BEFORE average life expectancy .. but if you think you'll live into, say, your early ninties, waiting and adding to that eventual benefit that will be there for the rest of your life makes more sense.

...

This analysis really needs to be done with your specific numbers. But a very broad brush ruile of thimb is that you must live to somewhere between 86 and 88 (all other things being equal) to make delaying past age 66 provide a greater net present value.

...

One other piece to this is your cashflow needs. If, when you DO retire, your pensions and other retirement investment are easily enough to fund your lifestyle, the defferring as long as possible certainly maximizes, purely financially.

...

As you can see this is a very open-ended and multifaceted question. Hopefully I've laid the foundation for thinking it through

...

Please let me know what questions you have from here

...

(likely, the BEST answer to this question, would come from doing a full blow financial plan with an adviser (a fee only adviser that is helping you make smart money decisions, not trying to sel you something for a comission)

...

lane

...

I have a law degree, (Juris Doctorate), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

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