When deciding when to take social security benefits, there are two very important factors that Thomas Fross, financial advisor and contributor to Forbes.com, considers.
The first thing Fross talks with his clients about is life expectancy. He finds out how long a client's parents lived and gets their medical history so he can make an educated guess on their life expectancy. The second thing he talks about are other income sources a client may have so they can defer social benefit benefits by taking income from other sources. He says it might be more tax-efficient to do so anyway, because they may be able to take that income from non-qualified accounts, thereby keeping themselves in a very low tax bracket until they're 70.
They they take social security benefits too early and they decide to go back to work and make too much money, then 50% over and above a certain level goes back to the government, Fross cautions.
Today, Fross says it's easier than ever to help clients because there are more resources advisors have access to, where we can can plug in a lot of different scenarios to determine the optimal age for the client to begin distribution.
Fross says that if you're in good health and there could be a long life expectancy, it's better to wait. If not, beginning to take those distributions, even if they're not needed and just investing them, makes more sense. This way, they can get something out of the money they made their whole life.
Thomas Fross is a contributor to Forbes.com and more information on wills and trusts in the article he wrote can be found here. Fross spoke with Retirement News Today, providing online, on-demand retirement news video content. Retirement News Today is a featured network of Sequence Media Group.