Social Security sign up or not


F

F.H.

A friend is about to turn 62, is earning 35,000 per year and
just barely making ends meet. Should she sign up for social
security? I say yes, regardless of tax rates *any*
additional income would be helpful. Her accountant (without
benefit of in depth discussions) was quick to say no, that
the tax rates are too high?

TIA for any input.
 
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A

A.G. Kalman

F.H. said:
A friend is about to turn 62, is earning 35,000 per year and
just barely making ends meet. Should she sign up for social
security? I say yes, regardless of tax rates *any*
additional income would be helpful. Her accountant (without
benefit of in depth discussions) was quick to say no, that
the tax rates are too high?

TIA for any input.
There are lots of factors to consider when making a decision
as to when to take SSA benefits: early, at FRA or deferred
until age 70. In this case we don't have to consider all of
them as two factors work against her:

1. She has not reached FRA (full retirement age). Therefore,
for every $2 of earnings she makes in excess of $12480
(2006) she loses $1 of benefits. In her case that amounts to
a loss of $11,260.

2. Her income is such that her SSA benefits will become
taxable to some extent.

Therefore, the amount of SSA benefits she would net after
having to pay back $1 for every $2 plus having to pay tax on
any balance would leave her with probably very little or
nothing if one assumes that her historical earnings record
is similar to her current earnings.
 
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R

Rich Carreiro

F.H. said:
A friend is about to turn 62, is earning 35,000 per year and
just barely making ends meet. Should she sign up for social
security? I say yes, regardless of tax rates *any*
additional income would be helpful. Her accountant (without
benefit of in depth discussions) was quick to say no, that
the tax rates are too high?
Don't forget about amount of benefit!

If she signs up now, she'll have a permanently reducted
benefit.

Depending on her currrent financial situation and her
life expectancy it may yet make sense for her to sign
up now for reduced benefits, but she darned well better
take the permanant reduction into account in her thinking.
 
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L

L K Williams

F.H. said:
A friend is about to turn 62, is earning 35,000 per year and
just barely making ends meet. Should she sign up for social
security? I say yes, regardless of tax rates *any*
additional income would be helpful. Her accountant (without
benefit of in depth discussions) was quick to say no, that
the tax rates are too high?

TIA for any input.
If your friend is only 62 and making $35,000 a year, she is
not eligible for any social security. Technically, she
could file for a reduced benefit but the "give back" rules
would take is all away.

If she files but has to repay benefits because of excess
earnings, she locks in the reduced, early benefi for the
rest of her life. Not a good idea!

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans
 
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H

HW \Skip\ Weldon

Rich Carreiro said:
If she signs up now, she'll have a permanently reducted
benefit.
And future COLAs will apply to a smaller number.

-HW "Skip" Weldon
Columbia, SC
 
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C

cpabakem01

F.H. said:
A friend is about to turn 62, is earning 35,000 per year and
just barely making ends meet. Should she sign up for social
security? I say yes, regardless of tax rates *any*
additional income would be helpful. Her accountant (without
benefit of in depth discussions) was quick to say no, that
the tax rates are too high?

TIA for any input.
Social Security Gov. Website:

http://www.socialsecurity.gov/retirechartred.htm

Milt Baker CPA
 
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