Sandy & Shirley
Recycles dryer sheets
Shirley is about to retire on her late husband’s survivor benefits and will convert to her own benefits at age 70. This will happen in May of that year and the way it was explained by our Social Security office can create a small tax problem.
The following chart is her actual expected benefits multiplied by a factor to make them private and are also adjusted by an estimated 1.25% annual COLA.
We were told that her conversion to her own benefits had to wait until January of the following year and that she would then receive the difference for the last 7 months of the actual year she turned 70 as a retroactive amount added to the following year.
As the chart shows, her age 70 benefits will be all 12 months as if she was on survivor benefits the entire year, then age 71 will be her own benefits plus the retroactive, and from 72 on just her own benefits. The “Should Be” column shows what we estimate her benefits would be if they actually changed her benefits when she turned 70 and not the following January.
The $42,325 benefits at age 71 will push her into higher tax brackets and cost her money! Plus we have to wait for the extra income!
Does anyone know if this is correct? Can she apply and start her own benefits when she actually turns 70 and not wait till the following year?
The following chart is her actual expected benefits multiplied by a factor to make them private and are also adjusted by an estimated 1.25% annual COLA.
SSB | Age | Should Be |
$16,433 | 62 | |
$17,926 | 69 | |
$18,151 | 70 | $26,905 |
$42,325 | 71 | $33,571 |
$33,991 | 72 | |
$34,416 | 73 |
As the chart shows, her age 70 benefits will be all 12 months as if she was on survivor benefits the entire year, then age 71 will be her own benefits plus the retroactive, and from 72 on just her own benefits. The “Should Be” column shows what we estimate her benefits would be if they actually changed her benefits when she turned 70 and not the following January.
The $42,325 benefits at age 71 will push her into higher tax brackets and cost her money! Plus we have to wait for the extra income!
Does anyone know if this is correct? Can she apply and start her own benefits when she actually turns 70 and not wait till the following year?
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