How part-time work in retirement can affect Social Security taxes and Medicare costs

For some older Americans, retirement turns out to be a fleeting status. After leaving a 40-hour work week behind, many retirees end up taking on part-time work even if it wasn’t part of their initial retirement plan. “We’re seeing a trend of people retiring from a long-term career … and a while later deciding they want a part-time job,” said certified financial planner Julie Virta, a senior financial advisor with Vanguard.

“I still see people working at age 70, 71 or 72,” Virta said. “It brings them a sense of value that they had in their long-time professional career.”

More than half (54.7 percent) of people ages 60 to 64 were working at least part time in 2017, according to the Bureau of Labor Statistics. In the 65-to-69 crowd, nearly a third (31.2 percent) were in the workforce last year.

If you find yourself among those who return to work for any number of reasons — i.e., personal fulfillment, financial necessity — it’s important to be aware of the impact that the extra income could have on other areas of your financial life.

“If you choose to go back to work, there are probably a whole bunch of reasons it makes sense,” said DeDe Jones, a certified financial planner and managing director at Innovative Financial. “You just should know what to expect.”

Effect on Social Security
If you tap Social Security before your full retirement age (as defined by the government) and are still working or return to work, your wage income could reduce your benefits.

While delaying Social Security for as long as possible means a higher monthly check, many people take it as soon as they can — at age 62 — or soon thereafter.

If you do start getting those monthly checks early, there’s a limit on how much you can earn from working without your benefits being affected. For 2018, that cap is $17,040.

If you earn more than that, your benefits will be reduced by $1 for every $2 you earn over that threshold.

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Full Story: CNBC

By |2018-08-14T20:36:33+00:00July 2nd, 2015|Accounting|0 Comments

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