What About Taxes? The Side of This Decision Most People Miss
Claiming Social Security early can actually increase your lifetime tax burden in ways that aren’t immediately obvious.
Up to 85% of your Social Security benefit is taxable if your combined income (adjusted gross income + non-taxable interest + half of Social Security) exceeds $34,000 for individuals or $44,000 for couples.
If you claim early while still drawing down taxable retirement accounts, you may push yourself into a higher combined income bracket, making more of your benefit taxable.
Conversely, delaying Social Security while doing Roth conversions in your early retirement years can actually reduce your lifetime tax burden significantly—giving you tax-free income later while reducing future required minimum distributions.
This is a reason to work with a financial planner or tax advisor before making your claiming decision, particularly if you have a mix of pre-tax and Roth retirement accounts.
