Will IRA withdrawals affect my wife's early SS benefits when she retires in 2025?

Good news - IRA withdrawals are NOT considered earned income for Social Security purposes. They won't trigger the earnings test that reduces benefits $1 for every $2 over the limit. Only wages from employment or net earnings from self-employment count toward the earnings limit. So your wife's benefits won't be reduced due to IRA withdrawals after she stops working in March 2025. Regarding taxation though, both IRA withdrawals and Social Security benefits can affect how much of your SS is taxed: - If your combined income (adjusted gross income + nontaxable interest + 1/2 of SS benefits) is between $32,000-$44,000 (married filing jointly), up to 50% of SS benefits may be taxable - If combined income exceeds $44,000, up to 85% of SS benefits may be taxable With your planned withdrawal amounts, you'll likely have a significant portion of your SS benefits subject to income tax.

just FYI not all income counts for the earnings test. my bother retired last yr and he gets a pension and takes money from his 401k and niether one counts for the SS limit. but he did some consulting work for his old company and THAT counted so they reduced his SS checks. really confusin system...

Based on what you're describing, the IRA withdrawals aren't a problem for your wife's early SS benefits. The real concern is her actual work income from January through March 2025. If she's the primary breadwinner, she might earn enough in those three months to trigger a significant reduction in her SS benefits for 2025. Also, be careful with your tax planning. With $60K in SS benefits and another $60K in IRA withdrawals, you'll definitely have 85% of your SS benefits subject to federal income tax. Have you considered delaying some of your IRA withdrawals and letting them continue to grow tax-deferred? Or perhaps doing Roth conversions in lower income years?

I'm curious about something related to your situation - does anyone know if there's a special rule for the first year of retirement? I seem to remember reading that SSA has some kind of monthly rule for the year you retire rather than just using the annual limit? My husband is facing a similar situation next year.

DONT TALK TO SSA ON PHONE!!! Its IMPOSSIBLE to get through these days!!! My sister tried for 3 weeks to talk to someone about her reduced benefits because she's still working part time. She would wait on hold for HOURS then get disconnected!!! Try going to your local office but the wait times are crazy there too. The whole system is broken!!!

To summarize what others have said about your situation: 1. IRA withdrawals are NOT earned income for Social Security purposes and won't affect the earnings test 2. For taxation of Social Security benefits, with your planned income, expect 85% of your benefits to be taxable 3. For your wife's early retirement in March 2025: - Her January-March 2025 earnings could put her over the annual limit - BUT, she can use the "first year rule" (monthly earnings test) - This means she'll get full SS benefits for any month she's retired and either doesn't work or earns under the monthly limit I'd suggest meeting with a financial advisor who specializes in retirement income planning. The interaction between taxes, Social Security, and IRA withdrawals gets complicated, and optimizing the strategy could save you thousands.

One thing to consider that hasn't been mentioned: if your wife is the higher earner, has she considered waiting until her FRA or even age 70 to claim? Her benefit would be significantly higher (approximately 76% more at 70 compared to 62.5). With your already-established SS benefit and IRA withdrawals, you might have enough income to support her delaying benefits, which could be very valuable for long-term planning and survivor benefits. Just something to think about - each situation is different.

Thank you all for such helpful information! I've learned so much: - IRA withdrawals won't affect the earnings test (big relief) - We can use the monthly rule for my wife's first year of retirement - We should expect 85% of our SS to be taxable (not great news) - We might want to reconsider having my wife claim early We'll definitely sit down with a financial advisor to optimize our strategy. The suggestion about her waiting until FRA or even 70 is interesting - I hadn't considered the survivor benefit angle. I really appreciate everyone taking the time to share your knowledge and experiences!

Welcome to the community! I'm new here but wanted to share something that might help with your tax situation. Since you mentioned being concerned about having 85% of your SS benefits taxed with your planned income levels, you might want to look into tax-loss harvesting from any taxable investment accounts you have, or consider timing your IRA withdrawals more strategically. For example, instead of taking $60K annually from IRAs, you could take larger withdrawals in years when you have lower income (maybe due to medical expenses or other deductions) and smaller withdrawals in years when your income is already high. This could help manage which tax bracket you're in each year. Also, if you have any charitable giving plans, qualified charitable distributions (QCDs) directly from your IRA to charity after age 70.5 can count toward your required minimum distributions but won't be included in your taxable income - which could help reduce that combined income calculation for SS taxation. Just some thoughts from someone who's been researching similar strategies for my own retirement planning!