Are you considering pulling the trigger to retire and start collecting income through your Social Security benefits? If so, you’re not alone, as 1 in 4 older adults rely on Social Security for at least 90% of their income, according to the Census Bureau. 

As an eager retiree, it’s normal to picture yourself enjoying life without financial stress. The good news is that the government understands these concerns, which is why they offer services like Social Security income benefits.

But if you’re worried about how much money you can earn while simultaneously collecting Social Security payments, then look no further! In this blog post, we discuss ways to potentially maximize your retirement income by understanding exactly how much external income is allowed while still maximizing your Social Security benefit. 

Here at Intelliplan Financial, our financial professionals will share easy-to-understand insights into this important question!

What is social security, and how does it work?

Social Security is a social insurance program administered by the United States Social Security Administration. It provides guaranteed monthly benefit payments to retirees who have reached the eligible age of 62 or over.

The amount of social security benefits one receives depends on how much they paid into social security during their working lives and their age. Social security looks at your 35 highest-earning years to determine your earnings history. So if you’re nearing retirement, much of your earnings history has already been determined. Unless you have a sizable increase in earnings, that factor likely won’t change much between now and when you retire.

However, you do have complete control over when you start taking benefits, and that decision is based on your full retirement age.

Your full retirement age is the age at which you can start receiving your full Social Security retirement benefits. If you take Social Security prior to your full retirement age, your benefit will be reduced, and that reduction is permanent. You may start receiving reduced benefits as early as age 62. 

To calculate your full retirement age, visit ssa.gov or refer to the chart below:

Age to Receive Full Social Security Benefits¹

*If you were born on January 1st, you should refer to the previous year.

Just as your benefits are reduced if you take them early, they also increase if you wait past your full retirement age to begin taking them. For those born in 1943 or later, Social Security benefits increase each year they’re delayed after reaching full retirement age up to age 70.

Usually, social security benefits are associated with retirement income. Still, other social security programs are available such as social security disability insurance, survivors’ benefits, and supplemental security income, all of which have different rules.

How much can you earn while still collecting Social Security benefits?

If you’re interested in receiving Social Security benefits while you are still working and earning income, there may be limits on how much money you can make while doing so before your benefit amount is potentially reduced.

If you are under full retirement age for the entire year, $1 is deducted from your benefit payments for every $2 you earn above the annual limit. For 2023, the rules state that taxpayers under full retirement age have an earnings limit of up to $21,240 of annual earned income.

In the year you reach full retirement age, your benefit will be deducted by $1 for every $3 you earn above the annual limit. For 2023, the limit is $56,520 of annual earned income. Your earnings are only counted up to the month before you reach full retirement age.

Once you reach full retirement age, you can begin receiving full benefits within the month in which you reach full retirement age no matter how much you earn.

A good rule of thumb is to make sure to check the age restrictions and earnings limits for receiving social security before you claim benefits or accept any job offers.

How can I maximize my social security benefits?

Maximizing your Social Security benefits can make retirement easier down the line, but it is important to plan ahead.

Before taking any retirement benefits, it’s important to take a holistic approach to your retirement income planning needs. Holistic financial planning is a process that takes into account all aspects of your life and goals, including investments, taxes, insurance, retirement income, social security and estate planning and how they work together.

By creating a holistic retirement income plan, you will optimize all of your assets – including Social Security – to work collectively towards your goals while reducing inefficiencies like:

• Retirement Income Gaps
• Paying Excessive Taxes
• Risking Everything From a Catastrophic Health Issue
• Running Out of Money In Retirement

Consider working with one of our financial advisors who utilizes a holistic planning approach to help plan your retirement income so you can get the most out of your Social Security retirement benefits. Schedule your complimentary introductory meeting here.

In Conclusion

Social Security can provide individuals with a reliable source of income in their later years. 

However, knowing how and when to claim your social security benefit can be complicated. In order to maximize your benefit, it’s important to understand how it works, what you are eligible to receive, and how it coordinates with your overall financial plan.

We hope that this blog post has provided readers with some valuable insight into retirement planning and answered the questions you may have had about Social Security in 2023.

If you still have questions or would like to begin taking the steps toward preparing for your future, contact Intelliplan Financial today to get started on the path toward financial security during your golden years.

Citations

¹https://www.ssa.gov/benefits/retirement/planner/agereduction.html 

Disclosure: Financial Planning and Advisory Services are offered through Prosperity Capital Advisors (“PCA”), an SEC-registered investment adviser.  Registration as an investment adviser does not imply a certain level of skill or training. Intelliplan Financial and PCA are separate, non-affiliated entities. PCA does not provide tax or legal advice. Insurance services offered through Intelliplan Financial are not affiliated with PCA.