Stopping Social security after receiving payments at 62 ???
A prospect wanted to stop receiving his monthly check because he wants it to build up. But he is only receiving rental income. He also thinks it will help his wife’s check one day at his death. I don’t see any advantage to do so. Am I missing something?
Also he thinks there is a tax advantage to trading stocks vs. mutual funds. Is that true?
How would that compare tax -wise with putting money in variable annuities?
Permalink Submitted by Bruce Steiner on Mon, 2013-07-01 19:20
Investing in individual stocks would give him more control over capital gains, and would allow him to take capital losses to offset capital gains plus $3,000 per year of ordinary income. However, it’s much easier to diversify with mutual funds.Annuities would give him the tax advantage of deferral, and the tax disadvantages of all of the income being ordinary income and no basis step-up at death. He should also consider the fees and expenses of annuities, which are often substantial.
Permalink Submitted by mk foss on Tue, 2013-07-02 01:10
Social Security benefits are greater at normal retirement age (currently 66) than at age 62. A strategy had been to pay back the benefits received and start over again with higher amounts at 66. Social Security has changed the policy in this regard. I think that now you can only return about 8 months of Social Security payments and then resume at normal retirement age. He cannot make further contributions if his only income is from rentals but the benefit he’s entitled to can grow at 8% per year if he stops taking the early payments. There is information about this on the Social Security website.