Dear Liz: I\u2019m 64 and retired. My wife is 54 and still working. <\/p>\n
Half the people I talk to say take Social Security and just invest it, as you\u2019ll make more than waiting until you get older. Others say that the tax hit isn\u2019t worth it because my wife still works. <\/p>\n
I\u2019ve talked to a couple financial people, and still get mixed answers. What is your opinion?<\/p>\n
Answer: Social Security can be surprisingly complicated and many people don\u2019t understand the nuances that should guide claiming decisions. In other words, half the people you\u2019re talking to likely don\u2019t know what they\u2019re talking about.<\/p>\n
Let\u2019s start with a few basics, starting with the \u201ctax hit.\u201d If you have income other than Social Security, up to 85% of your benefit may be subject to tax. That doesn\u2019t mean 85% of your benefit is taxed away. It means up to 85% is included in your taxable income, and subject to your tax bracket. In 2026, federal tax brackets range from 10% to 37%.<\/p>\n
The earnings test can have a dramatic impact if you start Social Security before your full retirement age. The earnings test reduces your benefit by $1 for every $2 you earn over a certain limit ($24,480 in 2026). If you\u2019re retired and not earning money, though, the earnings test doesn\u2019t apply regardless of what your spouse might earn.<\/p>\n
What starting early does do is permanently reduce your benefit. If you\u2019re the higher earner, it also reduces the survivor benefit that one of you will get when the other dies. At that point, the smaller of a couple\u2019s two checks goes away and the survivor has to make do with a single benefit.<\/p>\n
If you delay, on the other hand, your benefit gets larger. After full retirement age, delayed retirement credits add 8% each year until your benefit maxes out at age 70. This guaranteed return is about twice what you\u2019d currently get from any other low-risk investment, such as one-year Treasuries. You might earn more in the stock market, but you also could suffer losses.<\/p>\n
Copious research shows that most people are better off delaying. You can start by reading \u201cHow Much Lifetime Social Security Benefits Are Americans Leaving On the Table?\u201d by David Altig, Laurence J. Kotlikoff & Victor Yifan Ye for the National Bureau of Economic Research at nber.org\/papers\/w30675<\/a>.<\/p>\n Liz Weston, Certified Financial Planner, is a personal finance columnist for NerdWallet.<\/a> <\/a>Questions may be sent to her at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the \u201cContact\u201d form at asklizweston.com.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Dear Liz: I\u2019m 64 and retired. My wife is 54 and still working. Half the people I talk…\n","protected":false},"author":2,"featured_media":89134,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[138,246,111,139,69,244,245],"class_list":["post-511731","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-business","tag-finance","tag-new-zealand","tag-newzealand","tag-nz","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/511731","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=511731"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/511731\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/89134"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=511731"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=511731"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=511731"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}