Financial Implications of Working Part Time After You Retire
Financial Implications of Working Part Time After You Retire
Social Security can be one of the most complicated retirement planning topics. You might already know that the longer you wait to claim your benefits (up to age 70), the higher your monthly checks will be. On the other hand, claiming benefits before your “full retirement age” (as early as age 62) can result in somewhat lower checks each month. For some people, this as an acceptable trade-off. Either you’re ready to retire (or need to), or you want to go ahead and claim that extra income each month.
Every situation is different, and sometimes it makes sense to claim Social Security benefits early. But some people are in for an unpleasant surprise, if they aren’t aware that earning income through employment can cause some of their benefits to be withheld.
This rule only applies to those who claim benefits before reaching their full retirement age (age 65 to 67, depending on when you were born). Once you reach your full retirement age, as defined by Social Security, it won’t matter how much money you earn from working. Your benefits will not be withheld.
If you do claim your benefits before your full retirement age, part of your checks will be withheld once you earn over a specific limit for the year. Currently that limit is $16,920, although it is periodically adjusted upward to account for inflation. For every two dollars you earn above that amount, one dollar of your Social Security benefits will be withheld until you reach your full retirement age.
Luckily, the withheld benefits are not lost forever. Once you do reach full retirement age, your monthly checks will be recalculated to credit you for the amount previously withheld.
If all of that sounds confusing, you’re not alone. Social Security is a complicated system, and many of the rules and procedures can catch people off guard. That’s why we strive to share pertinent information with you and prevent any unpleasant surprises. If you have questions about this topic, or anything else concerning your retirement plans, give us a call and we’ll be happy to help.
