Social Security and You: Turning 66 in 2018? Consider Filing for Benefits This Month
There is a bit of a catch. By starting his benefits in January, Ed will be accepting a slightly reduced amount. (Benefits are reduced roughly one-half of one percent for each month they are taken before full retirement age.)
If Ed's Social Security benefit at full retirement age is $2,000 per month, let's look at his options.
Ed's first option is to wait until July (his full retirement age) to start his Social Security benefits. He'll get $2,000 per month for six months or $12,000 for the year 2018.
Ed's second option is to file for Social Security in January. Starting his benefits slightly early, his monthly rate is reduced to $1,940. That comes out to $23,280 in total benefits for the year 2018. The downside to option two is his ongoing monthly benefit rate will be $1,940, $60 less than what he would have been getting in option one. But because he'd be getting about $11,000 less in total 2018 benefits in option one, it would take Ed a long time to make up that loss with his extra $60 per month in ongoing benefits. If I were Ed, I'd choose the second option.
Even if Ed was going to make more than the $45,360 income threshold between January and June, he only loses one dollar in Social Security benefits for each three dollars he exceeds that amount. So he probably still comes out ahead by filing in January.
Here is a quick example using that scenario. Let's say Ed will make $50,000 between January and June. That's $4,640 over the $45,360 limit. And one third of that excess, or about $1,546 must be deducted from his 2018 benefits. But he would still get $21,734 in benefits for the year. That's still way better than the $12,000 he would be due by waiting until July to file for his Social Security.
I know these rules are complicated and the math in the examples above might be difficult to follow. But my overall message is easy to follow: If you're reaching age 66 in 2018, talk to a Social Security representative sometime this month to find out if it's to your advantage to file for those benefits in January.
If you have a Social Security question, Tom Margenau has the answer. Contact him at firstname.lastname@example.org. To find out more about Tom Margenau and to read past columns and see features from other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.