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5 years ago my DH was laid off. He has done consulting work on and off. He will turn 66 in April, I just turned 63. No pensions. Last year he didn’t work too much and I got a subsidy with the ACA. He’s picked up a few jobs slated for 2019 so I am paying full premium for myself. He’s on MC. He will earn basically our yearly living expenses, especially when you consider it’s an additional $12,000 just for my insurance. Someone suggested he start SS when he turns 66 (FRA) since you can earn any amount and not have to be penalized. But, there’s tax ramifications and isn’t there a higher MC premium the following year if he earns too much? I’ll be going on MC end of 2020.
To put it in a bit more perspective, with his consulting work in 2018 we used 1.65% of our savings. This, to me, is great. I say let SS grow. There is no place to earn the interest right now to compare to letting it grow another year or two. My SS is about half his at FRA.
I will be talking to my accountant, but I’d like some of your valued opinions so I’m more educated on the subject when we speak.
Income in 2018 will affect Medicare and Part D premiums in 2020, and 2019 income will affect 2021 premiums. It's called IRMMA (Income Related Monthly Adjustment Amount). This is the booklet explaining the process and the added premiums for 2018, and 2019 added premiums are comparable to 2018 and available online. https://www.ssa.gov/pubs/EN-05-10536.pdf
I would delay as long as you can afford too. You can always delay for a few months and then start collecting if the need arises.
You will gain about 8% more in your SS for each year you delay. SS is also inflation adjusted.
Check and see if you should start SS now. When you are FRA you qualify for 50% of your husbands SS so no reason for you to delay past 66. (I maybe behind the times and this may have changed a few years ago.) Not sure but I think if you collect at 63 it will reduce the 50% a little.
Someone suggested he start SS when he turns 66 (FRA) since you can earn any amount and not have to be penalized.
That's not entirely true.
Since you're married, if your income plus 50% of your Social Security benefits exceeds $32,000 then you'll have to pay federal income tax on 50% of your Social Security benefits. If your joint income plus 50% of your Social Security benefits exceeds $44,000 then you'll have to claim 85% of your Social Security benefits as taxable income and pay federal income taxes on it.
Social Security will send you a statement. You can pay your taxes when you file your annual return, or make quarterly payments or you can opt to have Social Security deduct federal income taxes from your Social Security benefits.
Note that the taxes you pay on your Social Security benefits do not go to the General Fund, rather they go directly back to SSA. This is a method of means-testing Social Security beneficiaries.
You should also be aware that this is sort of like the AMT trap.
Like the Alternative Minimum Tax, the taxable Social Security levels are fixed and unchanging. Many households were not initially subject to the AMT, but after several years as their income increased they unknowingly became subject and got hit with fines and penalties by the IRS. You might not initially be subject to the taxation of Social Security benefits, but if your husband works for several years and his income increases, you might be. You just need to be aware of that.
they were talking about being penalized by having to give back money they earned , not income tax.
in the year you will be fra you can earn 3 dollars and give back only 1 unlike being younger when it is one for every 2 . after your birthday earnings are unlimited and you give none back for working . so there are special rules for your first year and the year you will be fra that are different then the years in between when you work and collect .
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