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Social Security and retirement with a cool job go hand-in-hand in real life today. A 2014 study found that there were more people in the 55-plus age group working than there had been since the 1960s, and more than 70% of pre-retirees reported wanting to work in retirement. The report adds that “in coming years, it will be increasingly unusual for retirees not to work.”

The coming years are here.

Retirees are working in increasing numbers and they, along with pre-retirees, actually look at working as being a personal goal, almost like an item on their bucket list rather than a knee-jerk, band-aide reaction to a financial crisis. In this light, they’re concerned about how working, and possibly earning some good income, affects their Social Security benefits.

There are three key concepts to understanding how working affects Social Security:
  • Full Retirement Age: The Social Security program allows workers to start receiving benefits as soon as they reach age 62. If  you start receiving benefits at age 62, you’ll get 75% of the full retirement amount. Receiving benefits may be put off by the worker until age 70. Full retirement age is the age at which an individual becomes eligible to receive 100% of their Social Security benefits. For example, individuals born in 1955 can receive 100% of their benefits at age 66 years and 2 months.
  • Earnings Test:  If a working individual starts receiving Social Security payments before full retirement age, the Social Security Administration will deduct $1 in benefits for each $2 that person earns above an annual limit. In 2017, the income limit is $16,920 . During the year in which a worker reaches full retirement age, Social Security benefit reduction falls to $1 in benefits for every $3 in earnings. For 2017, the limit is $44,880 before the month the worker reaches full retirement age.
  • Taxable Benefits: Once you reach full retirement age, Social Security benefits will not be reduced no matter how much you earn. However, Social Security benefits are taxable.
Now what?

There are many things to consider and many things that can affect what might happen regarding your Social Security and tax management. Better understanding of available options can make a significant difference in your overall decisions. Your LIFE is your business and no business runs successfully without a goal and a plan.

What’s the bottom line?

Whether you’re a retiree or a pre-retiree with a bucket-list-kind-of-job goal or know that you may be facing some income and budgeting challenges during retirement, there are things you can do now:

  • Understand that everyone needs a plan to coordinate retirement timing, work goals, Social Security and tax management
  • Contact me. Your LIFE is your business. Take good care of it. Let’s talk. 479-478-6831

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