After you leave the workforce and enter retirement, one of several things might happen. You might decide that you want to earn a little extra income, to cover holiday gifts or extra vacations. Perhaps an unforeseen major expense motivates you to go back to work. Or, in some cases, retirees simply grow bored and view a job as a way to stay connected to the community and remain active.
Whatever your reasons, it should be simple to just go out and find a part-time job, or even start a second career. Right?
Well, not exactly. Depending on your situation, earning additional income could affect your Social Security benefits. Let’s take a look at how that works.
Two factors determine whether a part of your Social Security benefits could be withheld: Your age, and the amount that you earn. If you’ve reached “full retirement age” (defined by the Social Security Administration, and based on your year of birth), then you don’t have to worry at all. No matter how much you earn, your benefits will remain unchanged.
If you’ve taken an “early” retirement – as in, before reaching full retirement age – then your benefits will be subject to certain earnings thresholds:
- If you earn less than $16,920 per year, you will keep 100 percent of your Social Security benefits
- If you earn more than this threshold, your monthly benefit check will be reduced by one dollar for every two dollars earned above the limit
Keep this rule in mind, in the event that you decide to retire before reaching your full retirement age for any reason. If unforeseen expenses pop up, or you decide that your retirement income is just not sufficient to sustain you, this rule could complicate your situation quite a bit. On the other hand, if you decide to take a part-time job to stay active and social, just keep that earnings limit in mind.
For more information on Social Security or retirement income planning in general, give us a call. We’re always here to help with any questions you might have.