financialforum
Social Security
When it comes to deciding when to take your Social Security
benefi ts, timing is everything. Phil Dyer, CFP, poses several
questions that might help you make your decision.
H
istorically, many Social the FRA, you can earn as much as you
Security recipients have taken want without reducing Social Security.
benefi ts early, at age 62. How- What will my tax situation be? Most
ever, this permanently reduces your ben- retired servicemembers will be taxed on
efi ts by about 25 percent. their Social Security benefi ts. Couples with
With both the full retirement age (FRA) combined incomes of more than $32,000
and life expectancy increasing, delaying will have 50 percent of their benefi ts taxed,
your benefi ts might make sense. Consider and couples with combined incomes of
the following questions before you decide: $44,000 or more will have 85 percent taxed.
Do I need the money? This trumps ev- Combined income includes military retired
Did You Take Your
erything else. If you need your Social Se- pay, pensions, retirement plan distributions,
Benefits Too Soon?
curity income to meet basic living needs, any employment income, and 50 percent of
a73 If you decide it was a then take it. However, most retired ser- Social Security benefi ts.
mistake to take your ben-
vicemembers have several other sources What is my health situation? If you are
efits early, you can reset
your Social Security clock
of income and the option to defer benefi ts. healthy and have a history of longevity in
with Form 521, “Request
What is my break-even age? The current your family, you almost always are better
for Withdrawal of Ap-
average break-even age is about 77, meaning off waiting until at least the FRA to take
plication.” You will have if you live past that age, it would have been benefi ts. However, if you have serious
to pay back all benefits
more benefi cial to defer drawing benefi ts health issues or a family history of prema-
received to date but won’t
to the FRA. You can determine your own ture death, then early might be better.
owe any interest or penal-
ties. Visit www.ssa
break-even age by visiting the IRS calcula- What is my marital status? Based on
.gov/cgi-bin/formsearch
tor at
www.ssa.gov/OACT/quickcalc/when how benefi ts work, different situations
.pl and click on SSA-521.
2retire.html. One important caveat about call for different strategies. As a general
the IRS calculator is it doesn’t factor in any rule, married men and single women are
interest you might receive if you take ben- better off waiting until at least the FRA to
efi ts early and invest the proceeds. take Social Security. For married women,
Do I plan to work? If you plan to work however, it might pay to take benefi ts
— even part-time — you likely are better early because they can “step-up” to a
off delaying benefi ts. If you draw benefi ts higher survivor benefi t if their spouse dies
prior to the FRA, you are penalized $1 in before they do. MO
Social Security benefi ts for every $2 you
earn above $13,560 (in 2008). So a part-
— Former Army Capt. Phil Dyer, CFP®, is
time job earning $18,000 would cost you
deputy director, Benefi ts Information and Finan-
$2,220 in Social Security benefi ts. This
cial Education. To fi nd a fi nancial planner near
penalty only applies to earned income,
you, contact Garrett Planning Network at
(866) MOAA-GPN (662-2476) or
www.moaa
not military retired pay or IRA distribu-
.org/garrett, or visit
www.moaa.org/fi nancial
tions. The good news? Once you reach center for other resources.
4 8 M I L I T A R Y O F F I C E R M AY 2 0 0 8 PHOTO: SEAN SHANAHAN
FFin_forum.indd
48in_forum.indd 48 44/2/08 9:18:01 PM/2/08 9:18:01 PM
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92