Delaying Your Social Security is the Best Tax-Free Retirement Strategy (the taxable spend-down)

Delaying your social security is often the optimal strategy for many retirees.

It is a case-by-case decision that must be analyzed thoroughly, but delaying your social security benefits allows your benefit to continue to grow at a guaranteed 8% per year… (where else can you see guaranteed returns of that magnitude)⁉️

So if you don’t need the money immediately, it pays to wait; it pays well.

This is a beneficial strategy for you, but it can be very beneficial for your surviving spouse as well (which many people fail to recognize).

By delaying your social security, you are maximizing the spousal benefit (which is 50% of the primary beneficiary’s benefit) in retirement.

So the longer you wait to take social security, the higher BOTH income values will be (yours and your spousal benefit).

But, it also allows your spouse to collect your higher benefit as a retirement income source for the duration of their life when you pass away.

This ensures that your surviving spouse has the maximum amount of social security income to last the remainder of his or her life, when they are much more likely to need it (for things like inflation and long-term care).

Delaying your social security benefit is also part of a tax-free retirement strategy that can reduce your total tax liability to $0 in retirement (meaning you get to keep more of what you worked so hard for your entire life).

When this is done correctly, it will ensure that your social security benefit itself will not be taxed, since most of your retirement income will be coming from tax-free environments like Roth IRA’s and very specific types of cash value life insurance.

These 2 vehicles allow you to reduce your “provisional income”, which is exactly HOW you prevent social security from being taxed (which statistically allows your retirement income to last about 5–7 years longer)🤯

To execute this tax-free retirement strategy, often times you need additional time to spend-down your taxable retirement assets….

Let me explain:

If you want to retire at age 60 but have MORE than $350,000 in a taxable retirement account, you are NOT going to be able to retire tax-free because eventually, the required minimums that you have to take out of that account will push your “provisional income” higher than social security allows, which will trigger a tax on your social security…🙄

BUT, if you delay social security until age 70, you can spend money out of your taxable account (keeping it below your standard deduction….which is essentially the amount of income you can take out of a TAXABLE account, tax-free)…😎

Your goal here will be to reduce the balance of your taxable account to $350,000 (or less) by the time you take social security, so that the minimums from your taxable account are tax-free AND your social security check is completely tax-free… 👏

Let’s chat 💬😎