Author Topic: Social security benefits for family--reason to draw sooner?  (Read 1273 times)

GreenQueen

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Social security benefits for family--reason to draw sooner?
« on: August 03, 2017, 08:52:33 PM »
My SO can draw social security anytime. We have a baby and possibly another on the way. My understanding is that our kid/s and I (as caregiver to eligible kid/s) could each receive up to 50% of his full retirement amount, up to 180%.

Does anyone have experience with this or advice? In the end, the numbers will help us decide but I want to make sure I understand how it works. Thank!

Finances_With_Purpose

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Re: Social security benefits for family--reason to draw sooner?
« Reply #1 on: August 04, 2017, 01:19:04 AM »
It's complicated.  The government makes all of this complicated to the point where you really need professional advice from a CPA or someone WITHOUT a financial incentive as to whether/what you do.  (There are so MANY sales people who mean well, but may offer you incorrect/wrong/foolish advice, and, at the end of the day, will walk away with their commissions regardless.  There are good ones, too, but it's incredibly hard to tell the difference - you usually can't unless you already know the person really well.) 

OK, to answer your question:

The amount you can draw goes up until you hit max age (66?).  Check your potential benefits w/ the SS office but know that they sometimes (often?) make mistakes and may give you bad info, so double-check it with an expert and see if it rings true. 

Verify how it may/will impact Medicare eligibility/age. 

You will want to consider things like: what's your life expectancy?  And your spouse's? 

Compare how much you'd like make v. what you'd make if you pull early (but get to pull longer), opportunity cost of that money (maybe it's worth even more if you're saving/investing it now, rather than waiting on your SS to increase). 

Another consideration: taxes.  Near retirement, taxes become the driving consideration for most folks.  You increase your income by taking SS.  SS becomes TAXABLE if you make more than a certain amount.  There's a formula (see this publication): https://www.ssa.gov/planners/taxes.html.  It will impact your taxes now and then. 

To max extent possible, you want to avoid tax - both on your SS, your income, and your retirement funds.  SS really distorts your taxation because of how the formula works: your income is taxed already, and SS gets taxed too, meaning you pay a good chunk of tax if you make more than a little (which depends upon how much your SS is) up until you make a pretty good chunk ($50k+?). 

On one hand, maybe you want less SS consistently, because you won't ever make much and it'll keep you from hitting the max at any point and having your SS taxed.  (Which feels like being double-taxed.)  On the other hand, you may want to wait and take bigger payments once retired, relying more upon SS.

There is no one right answer. 

Again, I can't overstate this: taxes are key.  Consult a CPA with retirement planning expertise, or someone like that who can advise and has NO financial incentive regarding what you do. 

I'm not a tax pro, so I can't pretend to give you the full answer here - nor can anyone else.  Especially without knowing much more about your situation.  There's no substitute for professional advice.

In fact, in general, you need a tax person.  Even if you make little.  My mom has one, and she makes very little.  The tax person has saved her tons, though.  They'll do your taxes, but the best part is you can call them during the year with questions exactly like this, and maybe spend $100-$200 (if anything) on input that will literally save you THOUSANDS UPON THOUSANDS.

(Sorry about the caps - not shouting, but want to emphasize.) 

Best of luck to you!!!!  When you get mad, remember Uncle Sam made it all this complicated...

Catbert

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Re: Social security benefits for family--reason to draw sooner?
« Reply #2 on: August 04, 2017, 07:56:52 AM »
Yep, your situation argues for taking SS ASAP.