By Mary Beth Franklin

If your clients can wait, here is yet another reason why it can pay to delay claiming Social Security benefits: a smaller tax bite in later years.

Income in the early years of retirement that exceeds certain modest levels can trigger a “tax torpedo” that subjects up to 85% of Social Security benefits to taxation.

Delaying Social Security benefits, of course, means that many clients may have to rely more heavily on investment portfolios in the early years of retirement. But the result — in addition to the eventual tax savings — will be a substantially larger Social Security benefit, creating a larger base amount for future cost-of-living adjustments. And for married couples, a larger benefit for the main breadwinner means a bigger benefit for a surviving spouse.

read the full article here http://www.investmentnews.com/article/20120415/REG/304159972

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