Social Security tax withholding
Hello, I will turn 66 this October. I am considering drawing from my Social Security effective 1/1/21 to pay down some debt before retiring in 2023. Is there a way I can calculate (on my own) the percentage of taxes that I should request SSA to withhold? Thank you.
Terry Says
First, please don’t take SS before you reach full retirement age. That is the worst mistake you can make. And since you plan to work another three years, if you take SS early, your benefits will be reduced because of your additional income. Frankly, if you can, it would be better to work an additional year to pay down that debt.
When the time comes, your SS benefits will be added to ordinary income. So you should calculate your marginal tax rate at that time, and that is the amount you should have withheld. But don’t get ahead of yourself by taking benefits early.
