Drawing Social Security Early and Still Working?

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Senior Tax Advisory Group

Posted on

Nov 13, 2020

Book/Edition

Colorado - Colorado Springs

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Many people decide to semi-retire early and start taking their Social Security benefit at the earliest age possible. Its appealing to be able to work part-time or where you have an interest or start a small business while making an income and receive Social Security retirement benefits. While early retirement and a part-time job may be of interest to you, it can affect your Social Security Retirement benefits if you arent full retirement age.
Theres a lot of confusion about the impact of working. You can still collect Social Security benefits, but if you earn above a certain amount, your monthly benefit will reduce. Here are a few things to know:

If you are drawing benefits and you are younger than your full retirement age or FRA (67 for those born after 1959), your benefit will be reduced by $1 for every $2 in earned income over $18,240 in 2020.
This reduces $1 for every $3 in earned income over $48,600 in the year in which you reach your FRA, but only for the months before you reach your FRA.
Once you reach your FRA, there will be no reduction in benefits, no matter how much earned income that you have.
Earned income is defined as income from work or self-employment and includes such things as your salary, any bonus, or your net self-employment income.
Any benefits that reduce due to too much earned income are not truly lost, and they will be added to your benefit once you reach your FRA.

Drawing your Social Security Retirement benefits early will impact your retirement, and your benefit could be subject to taxes if your combined income exceeds certain thresholds. Talk to an expert before you start taking your benefit.
Editors Note: This article was submitted by Darian Andreson, of Senior Tax Advisory Group and may be reached at 719-596-4844 or by email at Info@SpringsTax.com

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