It is important to understand the Social Security earnings threshold.
You would like to fully retire someday.
Just not now.
You want to continue to work part-time.
According to a recent Investopedia article titled “How the Social Security Earnings Test Works,” the Social Security earnings threshold could apply to you.
For 2018, it is $45,360 when you reach full retirement age.
If you are retiring before full-retirement aging and taking Social Security, the threshold is far lower at $17,040.
If your earnings are lower than the annual limit starting the month you begin taking Social Security, you will have no withholdings on your Social Security.
What if it is higher?
One dollar will be withheld for every three dollars you earn over the limit.
How are your earnings calculated?
The annual gross income as reported on your W-2 is used.
What does this mean?
Contributing to a 401(k) will not impact your earnings for the test.
Severance packages or other payments received on account of retirement are not subject to the earnings test.
Do the earnings of your spouse matter?
If you are claiming on the earnings of your current spouse and he or she is under full retirement age, their earnings will apply to the test.
What if you are claiming on the record of an ex-spouse?
Only your current earnings are considered.
What if you are self-employed?
You must work fewer than 45 hours per month to be exempt from withholding claimed prior to full retirement age.
Minor children and widows or widowers will also be subject to the earnings test on survivor benefits.
Early planning and preparation can help you keep more of your retirement money.
When it comes to financial planning, how much you keep is as important as how much you make.
Reference: Investopedia (September 18, 2018) “How the Social Security Earnings Test Works”