Tax on 403B withdrawal vs Soc Sec benefits

[graybuttrendy]

Hello, 

I am 64, thinking about retiring from work next year, need to decide if I want to sign up to receive Soc Security benefits or instead withdraw about the same amount from 403b investment for living expense.  I am trying to weigh the pro and con of each alternative.  The pro of delaying SS benefit (until I turn 70) is the guarantee of increasing monthly benefit of about 8% annually, vs. the risk of fluctuating stock market yields with the 403b.  The other factor to consider is to know which income may be more tax favorable.  I am in the 22% tax bracket, as my spouse will continue working and have an income from work.  Can you speak to which income source would be more favorable from a tax perspective?  Also, are the other factors to consider?  Thanks!

[marvin2it]

From a current income tax perspective only, social security benefits are preferable to 403(b) distributions because, at most, only 85% of social security benefits are taxed at the Federal level and not taxed at all in many states.  However, the tax implications are probably not the most important factor to consider.  Other important factors to consider are your life expectancy (hopefully an unknown), the rate of return on your investments inside the 403(b) plan and outside the 403(b) plan (if any), the impact on your spousal benefit (will be less than 50% if you claim before full retirement age), between age 64 and 67 monthly benefit increases 5/9 of 1% each month,  if you are forced back into the workforce your monthly SS benefits will  be greatly reduced if you exceed the annual income limit ($1 for every $2 above $22,300 in 2024).  Not an easy decision.