Timing Social Security: A Tax Perspective

Sep 15

Minimizing taxes in retirement is just as important as it is during your working life – but since the source of your income has changed, you need to deploy different strategies. We’ll take a look at what assets are taxed and how a thoughtful plan that incorporates timing your withdrawals and paying attention to how you rebalance your portfolio can reduce them.

Pre-retirement Planning for Taxes on Social Security

Up to 85% of your social security income may be subject to taxes if your provisional income exceeds either $34,000 for a single filer or $44,000 for a couple.¹ Provisional income is calculated by adding your adjusted gross income, nontaxable interest and half of your social security benefits. By decreasing adjusted gross income, you can potentially lower provisional income enough to reduce your tax liability.

Thinking about the order in which you tap retirement income can both increase income and reduce tax liability. Waiting... ...