Retirement Insights: Weighing the Options of Working While Retired

By August 2, 2019 January 15th, 2020 No Comments

Some older Americans discover the need to return to the workforce after retirement. Whether you return to work for an extra stream of income or for the benefits of activity and a second career, careful planning is needed as your Social Security benefits, health insurance, and tax situation might be affected.

Social Security: What Are Your Options?

Retirement life is different for everyone. Social Security is here to secure today and tomorrow, whether you sail into the sunset or decide to continue working. Some Social Security rules allow you to receive Social Security retirement or survivor benefits and work at the same time if you don’t make more than Social Security’s annual earnings limit (for 2019, that limit is $17,640).

If you are younger than full retirement age and make more than the yearly earnings limit, the Social Security Administration (SSA) will reduce your Social Security benefits. But starting with the month you reach full retirement age, your benefits will not be reduced regardless of how much you earn. Check out the SSA’s retirement planner, which explains the requirement and deductions, and what happens after you reach full retirement age.

You can find your full retirement age based on your date of birth by using the SSA’s Retirement Age Calculator. The Retirement Earnings Test Calculator can help you find out how much your benefits may be reduced if you are working and haven’t reached your full retirement age.

There are several things to consider if you plan to continue working after you retire. The SSA website gives you detailed information about the type of employment that you have. It also explains what types of pensions, annuities, and income do not count toward your earnings limits.

Claiming Social Security While Working

If you claim benefits before your full retirement age, your benefits are reduced a fraction of a percent for each month before your full retirement age. If you also continue to work, your benefits will be reduced if you earn more than the yearly earnings limits. If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2019, that limit is $17,640. In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2019, the limit on your earnings is $46,920, but we only count earnings before the month you reach your full retirement age.

It is important to note that after you reach your full retirement age, we will recalculate your benefit amount. This recalculation will give you credit for any months in which you did not receive a benefit because of your earnings. We will send you a letter that explains any increase in your benefit amount. So, if some of your retirement benefits are withheld because of your earnings, your monthly benefit will likely increase at your full retirement age to take into account those months in which benefits were withheld. See our Retirement Planner for more information.

If you delay your benefits until after full retirement age, you may be eligible for delayed retirement credits that would increase your monthly benefit. If you also continue to work, you will be able to receive your full retirement benefits plus any increase to those benefits resulting from your additional earnings when we annually recalculate your benefits. The month you reach full retirement age or later, you can work and earn as much as you want.

How Does Work Affect My Medicare?

If you claim retirement benefits at age 65 or earlier, you will be automatically enrolled in Medicare Part A and Part B the first day of the month you attain age 65. If you are still working beyond age 65 and have group health coverage through your employer, you might be able to postpone claiming Medicare until you stop working. Click here for more information on Medicare.

To Learn More

Policy Smart provides independent retirement and insurance advice by reviewing your current plans to improve coverage and reduce cost. Through our proprietary database – The CMR Database® (comprised of some 13,000 brokers and specialists globally) – we maximize access to the retirement and insurance industry for greater options that will translate to better coverage and lower cost. Since 1999, we have saved clients over $120 million.

Please email CMR Associates or call 877-447-4301 or 212-447-4300 for more information.