Image: zimmytws/Shutterstock.com
Many relatively young retirees choose to start receiving Social Security benefits—assuming they are eligible for them—at the earliest possible age of 62 in order to boost their cash flow.
In fact, about a third of people claiming Social Security do it at that age, even though there is a reduction in benefits for beginning before “full” retirement age—which for those retiring in 2023 will be a minimum of 66 and six months.
These people would rather have a smaller monthly benefit sooner, and receive it longer, than have a larger benefit later and receive it for a shorter period.
If you’re already among them, or you expect to be, try these tax-savvy tactics:
* Don’t sell appreciated securities you hold in taxable accounts. As long as you defer taking gains, you’ll hold down your adjusted gross income, which can lower any tax you’ll owe on your Social Security benefits.
* Try to hold your appreciated securities as long as possible. If you die while still owning them, your heirs might get a “step-up in basis,” depending on the tax law at that time. If so, no income tax will be paid on the appreciation of those investments during your lifetime.
Remember, this is based on claiming Social Security benefits before full retirement age. You’ll want to do the math first to see whether that makes sense for you personally; a useful online tool is at ssa.gov/benefits/calculators.
Late-Year Retirement Considerations: 2022 Has Advantages for Feds
Extra Time Off around Christmas Holiday Unlikely This Year
The Process of Retiring: Check Your Agency’s Work
TSP: Don’t Spend it All in Once Place
OPM to Close FLTCIP to New Enrollments Starting December 19
RBD: Required Beginning Date for Distributions
The Best Date for Feds to Retire in 2022
Pay Gap Increases; New, Expanded Localities Again Recommended
Pay Attention to Family vs. Self Plus One Rates in FEHB, OPM Advises
FEHB: Federal Benefits Fast Facts
8 Mistakes Employees Make During Open Season
Looking Forward to a Lump-sum Payment for Unused Annual Leave