In the past, most of the workforce had a clearer approach to retirement. You would work long hours for nearly four decades, and around age 65, you would retire. Of course, many people did not follow this traditional path, but today, the lines of retirement are much less clear. The Great Recession of 2008 delayed retirement for many people.
Earn Your Credits
The goal of social security is to have a steady income once you retire, but you must first pay into the program by earning credits. In 2022, you need to earn $1,510 to get one credit, or $6,040 to earn the four credits. This is up from the 2021 threshold of $1,470 for one credit, or $5,880 for the four credits.
Know the Ages
Social security offers retirement benefits based on age. Here’s a quick look at the ages you need to know.
Consider the Penalties
While social security seeks to keep your contributions as long as possible so that funds can be distributed to a larger number of beneficiaries, it provides information about working while receiving retirement benefits during your retirement years.
Will You Get the Money Back?
The money that is withheld by social security will be refunded once you reach full retirement age. At that time, social security recalculates your benefits and gives you credit for the months when benefits were withheld. But remember, if you received benefits before full retirement age, your check will not be of the full amount it would have been had you waited.
Tax Implications
Another issue with receiving social security benefits while working is the potential tax liability. If you are married and file taxes jointly with your spouse and earn more than $44,000, up to 85% of your social security benefits may be taxable. As of 2021, IRS guidelines indicate that if you are married and file jointly with your spouse and have a combined income between $32,000 and $44,000, up to 50% of your benefits may be taxable.
Conclusion
Most financial planners agree that waiting until you reach full retirement age may be best if you can afford to do so. If you cannot wait and need to start receiving benefits before full retirement age, consider working only up to the maximum earnings limit for that year to avoid harming yourself financially.
While continuing to work once you enter your retirement years may seem to generate more income, that may not be the case when it comes to social security. Since social security benefits can be complex, especially when combined with other financial factors in your life, it may be best to speak with a financial advisor about the best way to maximize your benefits.
Frequently Asked Questions
How much can I earn while collecting social security?
You can earn as much as you want while collecting social security, but you may incur additional taxes or impact the amount of your benefits if you have significant excess income. In 2020, you could earn up to $18,240 without affecting your benefits, and in 2021, you could earn up to $18,960. In 2022, your benefits won’t be affected until you earn up to $19,560.
How do I start collecting social security benefits?
You can apply to start collecting social security benefits online. You can fill out the application up to four months before the time you plan to start receiving benefits. Be prepared with personal information and documents, including direct deposit information, proof of citizenship, and proof of age.
In
What month can you start collecting Social Security?
You can start collecting Social Security in the first full month in which you turn 62 years old. This means if your birthday is on the 15th, you will not be able to start receiving benefits until the month after you turn 62. If you were born on the 1st or 2nd of the month, you can start receiving benefits that month.
Source: https://www.thebalancemoney.com/social-security-retirement-benefits-while-working-2894597
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