Smart Strategies for Retirees

Strategies for Social Security

While I know you're not relying on Social Security to fund your retirement, you're still entitled to it.

So when should you start collecting? You can start as early as age 62, but you'll only get partial benefits until you hit the true retirement age, which is between 65 and 67 these days.

As an example, if you were born between 1943 and 1954, you can start collecting at age 62, but you'll only get 75% of your benefits. If you wait until age 66, you'll get 100%. People born after 1960 have to wait until 67 to get full retirement benefits (the full age of retirement has been increased since people are living longer).

Those benefits will be taxable to you if your income is above a certain level. Here's the technical rule: Your benefits will be tax-free if "your adjusted gross income plus half of your social security benefits plus all of your tax exempt income" is less than $25,000 for a single taxpayer and less than $32,000 for married taxpayers filing jointly.

So if you're going to start collecting your Social Security benefits, talk to your tax planner. It may make sense to sell stock next year or move some deductions into this year to avoid a big tax hit.

Just Give It Away, Already

Start giving money away while you're still alive and watch your heirs benefit from it. For 2006, you can give up to $12,000 to anyone without incurring a tax on your gift. A married couple can give $24,000 without incurring a gift tax. Just make sure you do it before year-end.

Then, if your grandchild is in college, consider paying his tuition outright. If you pay the college directly, there are no limits on how much you give, so incurring a gift tax is not a worry. And the best part is that you can pay the college and still give your grandchild $12,000. So you got all of that money out of your estate and didn't pay a cent in gift-tax. Very cool.