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. If you’re one of them, 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 may lower the 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 that tapping Social Security before your “full retirement age”—now 66—will mean a reduction in your benefit. On the other hand, you’ll be receiving the benefit longer. You’ll have to do the math to see which makes more sense for you personally.