Some people decide to retire early and start drawing Social Security early. Many people are unable to live out their retirement plans due to inadequate retirement savings. In addition, many are spending retirement working another job.
However, some people enjoy working and want to do so during retirement. It’s appealing to be able to work part-time or where you have an interest. Or even start a small business while making an income and receiving Social Security retirement benefits.
While early retirement and a part-time job may be of interest to you, they can affect your Social Security Retirement benefits. If you aren’t at full retirement age. Your Social Security retirement benefits may be subject to taxes if your combined income, Social Security, and wages exceed a certain threshold. Combined income is your adjusted gross income plus one-half of your Social Security benefit plus any income earned from tax-exempt interest income. There is no age limit, including income from all sources, earned or unearned.
Often, retirees are confused about the impact of working in retirement. You can still collect Social Security benefits, but earning above a certain amount may reduce your monthly benefit. Here are a few things you need to know about working and drawing Social Security Retirement benefits:
- If you are drawing benefits and you are younger than your full retirement age (FRA), Social Security will deduct $1 from your benefits for every $2 or $3 you earn above a certain amount.
- After you reach full retirement age, Social Security will increase your benefits to account for the money it withheld earlier.
- Earned income is income from work or self-employment and includes your salary, bonus, or net self-employment income.
- Any benefits that reduce due to too much earned income are not truly lost and will be added to your benefit once you reach your FRA.
Source: What Income Reduces Social Security Benefits? Investopedia
Use the Social Security Retirement Earnings Test Calculator to determine if you are at risk for reduced Social Security benefits if you continue working. Social Security can be confusing, and if you have any questions regarding your benefits, including when to claim them. Contact your local Social Security Administration office to schedule a meeting.
Taking Benefits Early
Suppose you plan to take Social Security Retirement benefits early and continue to work. In that case, you can modify your financial plan to reflect how working may or may not benefit you. Once your financial professional has run your Social Security Retirement benefits and income scenario, you can make a more informed decision. Contact your financial professional today regarding how working in retirement may impact your situation.
SWG 2444322-0922b The sources used to prepare this material are believed to be true, accurate and reliable, but are not guaranteed. This information is provided as general information and is not intended to be specific financial or tax guidance. When you access a link you are leaving our website and assume total responsibility for your use of the website you are linking to. We make no representation as to the completeness or accuracy of the information provided at this website. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to or your use of third-party technologies, websites, information and programs made available through this website. This article is not endorsed or approved by any other Government Agency.
At Perennial Pride we discovered how to align with the core principles of the Prosperity Economics Movement. Therefore, I created Perennial Pride to help educate people on the truth of money. So you, too, can take advantage of alternative approaches outside typical financial planning. In conclusion, contact us today to understand how you can align your finances with the prosperity economics movement.