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Friday, January 14, 2011

When Should You Start Receiving Social Security?

Don Farmer's, likely the most widely utilized teacher of tax by tax professionals, favorite answer to this, and all other tax questions, is IT DEPENDS!  There have been articles written that advocate a more certain answer .... one that applies to most people in most circumstances.  However, due to the diversity in both people and circumstances, Don's answer is more correct.  Here are some of the things the answer depends upon:

.  If it is likely that one will not live beyond age 77, then starting at age 62 can result in more cash receipts IF, earned income after 62 does not significantly reduce cash receipts between ages 62 and 77.  That one statement contains two ifs.  The first if can seldom be answered definitively but according to uniform life expectancy tables, a healthy person aged 62 can expect to live to 85.5.  The second if is based on rules that currently state that after earned income exceeds $14,160 that benefits received are reduced $1 for each $2 earned income exceeds the threshold until AFTER age 62 through age 65.

.  If a person needs the cash flow now (can't wait until later) to survive, then now can trump later even when later may mean more over time.

There is a lot of mind-boggling information at www.ssa.gov.

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