Broker Check

Retirees Going Back to Work & Social Security

April 22, 2022

This blog is for those of you who might already be retired, have turned on Social Security, and are thinking about going back to work.

There are a couple of reasons why you might be considering working a part-time job. Everyone is feeling the pinch right now, and you may be too. Gas, groceries, medical costs, and everything else is more expensive right now. Or, you could just be bored! Maybe you're looking for a way to stay busy, get out, and see people again. Hey, Tom Brady did it!

Whatever your reason for picking up a little extra income, you might be interested to know how that extra money would affect your Social Security Benefits.

1. This only affects folks who have already turned on their Social Security benefit. You are NOT affected if you haven't turned Social Security on. If you are younger than 66 or 67, we recommend talking to your financial advisor before turning SS on.

2. It depends on how old you are. If you are older than the Social Security “full retirement age" of 66 or 67, depending on when you were born, then there is no limit on how much you can make while in retirement. So, get out there!

If you have Social Security turned on and have not reached full retirement age, Social Security will deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2022, that limit is $19,560.

The example that the Social Security Administration gives on its website is this:

  • You are entitled to $800 a month in benefits, which is $9,600 a year.
  • You work and earn $29,560 during the year ($10,000 over the $19,560 limit). Your Social Security benefits would be reduced by $5,000 ($1 for every $2 you earned over the limit).
  • You would receive $4,600 of your $9,600 in benefits for the year.

It’s a little less deduction in the year that you turn full retirement age. They will deduct $1 in benefits for every $3 you earn above an increased limit of $51,960 for 2022. You are free to work without any Social Security deductions after your birthday that year.

When SS figures out how much to deduct from your benefits, they only count the wages you make from your job or your net profit if you're self-employed. They include bonuses, commissions, and vacation pay. They don't include pensions, annuities, investment income, interest, veteran’s benefits, or other government or military retirement benefits.

Keep in mind that your benefits could also be taxable depending on how much you make and whether you file individually or jointly for tax returns. 85% of your benefit could be taxable if you make more than $34k for individuals and $44k for joint filers.

If you’re considering going back to work and either believe your benefits will be affected or are unsure about when you should turn Social Security on, you can always talk to your tax professional or your Financial Advisor to help guide you through any questions you have.

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