Getting Close to Collecting Social Security? Here’s some things to consider.

1) Distributions from your IRA or pension will affect how your social security is taxed.
Single taxpayers receiving social security can pay tax on as much as 85% of their social security if modified adjusted income exceeds $34,000 (or for married couples filing jointly the number is $44,000). If modified adjusted gross income exceeds just $25,000 for single filers and $32,000 for married joint filers, then up to 50% of social security may be taxable.

Hint 1: Time large IRA or pension distributions so they take place BEFORE you start taking social security or in a year where social security is already 85% taxable.

Hint 2: Low-income years and those with net operating losses from business activities are the perfect time to reposition funds out of IRAs and Pensions to non-qualified (ordinary) accounts or ROTH conversion, so that funds will be available when needed without affecting the taxability of social security.

2) If you think you will retire in a higher or the same tax bracket, consider funding a ROTH IRA instead of a traditional IRA.
You will not get the tax deduction for your contribution but as long as you meet the other requirements the money you later take out will be tax free and this includes the growth.

3) Medicare Part B premiums depend on income.
Married taxpayers filing a joint return with income under $182,000 pay only $170.10 per person for Medicare Part B. For all others the threshold is $91,000. Depending on your income the Part B premiums can increase to as much as $578.30 per month per person.