Delaying first RMD and SS benefit
I know I can delay taking the first RMD until the year I turn 70 1/2, but can I also delay taking Social Security benefit until age 70 1/2…?
thanks…!
I know I can delay taking the first RMD until the year I turn 70 1/2, but can I also delay taking Social Security benefit until age 70 1/2…?
thanks…!
Permalink Submitted by Bruce Steiner on Sun, 2012-03-11 13:46
If you delay taking Social Security, your benefit will increase, up to age 70. It’s a way of buying additional annuity without incurring the costs of buying a commercial annuity. If you’re female, in good health, and your parents lived a long time, this might be especially attractive. The analysis is complicated if you have a spouse who is or may be eligible for Social Security benefits. The result of your analysis may vary depending upon the interest rate factor you use for the time value of money (to compare a smaller number of larger payments if you delay versus a larger number of smaller payments if you don’t delay). There have been several articles on this subject in the last couple of years.
Permalink Submitted by Alan Spross on Sun, 2012-03-11 17:57
[quote=”[email protected]“]I know I can delay taking the first RMD until the year I turn 70 1/2, but can I also delay taking Social Security benefit until age 70 1/2…?
thanks…![/quote]
You can actually delay your first RMD until 4/1 of the year following the year you reach 70.5. But if you do that, you will have two taxable RMDs to report for that year. For SS benefits, delayed retirement credits cease at age 70 exactly, therefore you would file your claim for SS benefits no later than a couple months prior to reaching 70. If you were born in 1943 or later, your SS benefit increases 8% for each year you delay beyond your full retirement age up to age 70.
RMDs can cause more of your SS benefit to become taxable. This affects mostly those in the 15% bracket so if you are already in the 25% bracket before RMDs, your SS income is already included in your AGI up to the 85% maximum amount and RMD income will not further increase taxation of SS.