Delaying Social Security benefits can be an effective strategy for many retirees, providing larger monthly payments later in life. However, it’s essential to understand the tax implications involved, especially when considering the “tax torpedo” effect. This article explores the tax-related aspects of delaying Social Security and how these might influence your retirement plan.

Understanding the Tax Torpedo

The “tax torpedo” refers to the sharp increase in marginal tax rates that some retirees experience as their Social Security benefits become subject to federal income taxes. The tax torpedo is triggered when additional income pushes more of your Social Security benefits into the taxable range, creating an unexpected and often steep rise in your tax liability.

Taxation of Social Security Benefits

Social Security benefits can be taxed at different rates depending on your total income. Up to 85% of your benefits could become taxable, depending on your combined income, which is calculated

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