Once you retire, you will rely upon your Social Security benefits, your annuity from years of service as a federal employee, and any money saved in your Thrift Savings Plan. That all sounds pretty straightforward, right? But what if you decide to take on a part-time job, start a home-based business, or even begin a new career after you retire?
In some cases, your Social Security benefits could be reduced, so take note of the rules regarding post-retirement earnings.
The first thing you need to know: If you wait to reach your full retirement age (currently somewhere between 65 and 67, defined by Social Security, and based upon your birth year), then you won’t have to worry about the Administration withholding any of your Social Security benefits.
The potential problem happens when you retire before your full retirement age. In that case, part of your Social Security benefits might be withheld, depending upon your income.
The earnings threshold is currently set at $16,920 per year. If your earnings from work fall below this limit, you don’t have to worry about anything. However, if you earn more than $16,920 per year, one dollar of your Social Security benefits will be withheld for every two dollars that you earn above the limit.
Remember, once you reach your full retirement age, this rule won’t affect you anymore. So, it’s not a situation that will last throughout retirement, but one that specifically affects those who take an early retirement.
Keep this rule mind if you decide to retire before your full retirement age. If an unexpected expense comes up, if you decide to earn extra money, or if you simply get bored and want to go back to work, your Social Security benefits could be affected. Give us a call and we can answer your questions or help you decide how this rule might affect your situation.