Social Security is a key part of your financial security in retirement, but many people are also fortunate enough to have retirement accounts like IRAs that they can draw from. However, many people fear that taking money out of an IRA jeopardizes your Social Security benefits.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, goes through the things retirees have to watch out for when considering withdrawing money from their IRAs. On one hand, Dan notes that there's no provision that forces you to forfeit Social Security benefits based on IRA withdrawals, even if you take Social Security early. The only forfeiture provision applies to wage and salary income, not IRA income. Yet Dan also points out that under some circumstances, Social Security benefits can be subject to taxation, and withdrawals from a traditional IRA can boost the income the IRS takes into account in calculating taxes on your benefits. As a result, Dan concludes that it's smart to coordinate your retirement account withdrawals to make sure that you minimize your taxes.
Make the most of Social Security
Knowing the tricks and traps of Social Security is essential to make sure you don't miss out on valuable benefits. In our brand-new free report, "Make Social Security Work Harder for You," our retirement experts give their insight on making the key decisions that will help ensure a more comfortable retirement for you and your family. Click here to get your copy today.