Q.  Robert, I am getting ready to turn 62 and would like to start taking my Social Security payments.  All my friends keep telling me to wait and start drawing it later.  Why should I let the government keep earning interest on my money?  – Billy in Winston-Salem

A.  Billy, everybody’s situation is different and I do not know a lot about your personal financial situation beyond your email. However, here are the rules.  While you can start taking payments at age 62, you will not get the full amount you have earned until you reach your full retirement age.  The full retirement age is currently 66 unless you were born in 1960 or later, then it is age 67.  So, if a worker was born in 1965 and signs up for Social Security at age 62 they would have a 30% reduction in payments than if they waited and signed up at age 67.  Also, if you wait until age 70 you will get an additional 8% per year for every year you delay until age 70.  After age 70 there is no additional benefit.  You might want to see a competent financial planner to see what is right for you.

Q. Robert, I recently turned 70 and the custodian for my IRA is telling me that I have to begin taking out Required Minimum Distributions soon.  I would rather leave my money in the account where it can earn interest.  Is there anything else I could do?  – Helen in Kernersville

A.  Helen, the answer is no.  If you do not take your RMD in a timely fashion you could incur a 50% tax penalty on the amount you should have withdrawn in addition to the regular income tax on the withdrawal.  So someone in a 15% tax bracket who misses a $5000 IRA withdrawal could incur a tax penalty of $3,250, including the 50% penalty and the 15% regular income tax.  In that scenario, if you would have just taken the withdrawal correctly the income tax on the withdrawal would have been only $750.  In our office we have different ways of using that money to bolster your estate planning.  In the end you do need to start the RMD.

Please keep the questions coming at robert@coopercares.com.

Please call the office at 336-993-2012 if you would like to schedule a one on one appointment with me.

Any comments regarding safe and secure investments and guaranteed streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Insurance and Annuity product guarantees are subject to the claims paying ability of the issuing company, and are not offered by Global Financial Private Capital.

Robert Cooper & Associates Inc
935 W Mountain St, Kernersville, NC 27284
(336) 993.2012