Working while taking Social Security may be more complicated than you think.
Are you nearing retirement?
Do you enjoy working?
Do you need to earn a little more moola to help with some expected expenses?
If yes, you may be considering some employment after retirement.
According to a recent Investopedia article “How Working Affects Your Social Security Benefits,” there is more to this decision than meets the eye or wallet.
You could end up paying more in taxes for your Social Security or decrease your benefit amount.
What should you consider?
The age you retire is important.
If you retire at full retirement age, you will be eligible to receive 100 percent of your Social Security benefit.
If you retire before this age, you will receive less per month.
How much less?
It could be about a third less, depending on how early you claim Social Security.
How old do you have to be to reach full retirement age?
This depends on when you were born.
If you claim early and earn too much, you could be in for a double hit.
Your Social Security will see a reduction in benefits if you earn more than a specific amount.
This is only calculated based on your work earnings.
What about if you have reached full retirement age?
You will not see a reduction in Social Security.
You do need to be cautious of taxes.
Your Social Security benefits will be taxed according to your adjusted gross income.
How do you calculate this?
Add half of your expected income to your tax-exempt interest and other income for the year 2018.
Is it more than $25,000 if you are single or more than $32,000 if you are married?
Some of your benefits will be taxed.
Is it more than $34,000 for you as an individual or $44,000 for you and your spouse as a married couple?
You could be in the 85 percent social security tax bracket.
As you can see, planning for your finances in retirement is important.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri), visit our estate planning website and be sure to subscribe to our complimentary estate planning e-newsletter while you are there.
Reference: Investopedia (December 27, 2017) “How Working Affects Your Social Security Benefits”