Drawing Social Security Early and Still Working? Here’s What You Need to Know.
Some people decide to retire early and start drawing Social Security early. Many people are unable to live out their retirement plans due to inadequate retirement savings. In addition, many are spending retirement working another job
However, some people enjoy working and want to do so during retirement. It’s appealing to be able to work part-time or where you have an interest. Or even start a small business while making an income and receiving Social Security retirement benefits.
Early Retirement
While early retirement and a part-time job may be of interest to you, they can affect your Social Security Retirement benefits. If you aren’t at full retirement age. Your Social Security retirement benefits may be subject to taxes if your combined income, Social Security, and wages exceed a certain threshold. Combined income is your adjusted gross income plus one-half of your Social Security benefit plus any income earned from tax-exempt interest income. There is no age limit, including income from all sources, earned or unearned.
Often, retirees are confused about the impact of working in retirement. You can still collect Social Security benefits, but earning above a certain amount may reduce your monthly benefit. Here are a few things you need to know about working and drawing Social Security Retirement benefits:
- If you are drawing benefits and you are younger than your full retirement age (FRA), Social Security will deduct $1 from your benefits for every $2 or $3 you earn above a certain amount.
- After you reach full retirement age, Social Security will increase your benefits to account for the money it withheld earlier.
- Earned income is income from work or self-employment and includes your salary, bonus, or net self-employment income.
- Any benefits that reduce due to too much earned income are not truly lost and will be added to your benefit once you reach your FRA.