Social Security: How To Work And Still Collect Benefits

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Many of us won’t have the luxury No work while receiving Social Security benefits.

But many pre-retirees don’t realize that their benefits will be taxed if they work before they reach the “normal” retirement age (NRA), which is 66 for most people today.

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The government doesn’t want you to take a double dip. If you retire as defined by your age, you will receive the full benefit, which varies by age and your lifetime income.

According to the Social Security Administration, the NRA . for the recipients after 2022The annual exemption amount in 2022 is $19,560, NRA. for the recipients in 2022The annual discount amount is $51,960, social security will Withhold $1 in Benefits For every $2 of earnings in excess of the lower exempt amount. They will withhold $1 in benefits for every $3 of income that exceeds the higher exemption amount.

You need to pay attention to how much income is reported to the IRS. This is how the tax is estimated.

By “income”, the government looks at wages, self-employment, dividends and other taxable income.

The easiest strategy for avoiding taxes is to simply take a job that pays under the threshold for your filing status.

As you probably guessed, if you have a source of income when claiming benefits — from 62 to 66 — it will reduce your benefits, so you’ll need to plan carefully.

Another strategy is to put as much money as you can before retiring in combined pay and bonuses and put it away in a Roth IRA or 401(k).

While you’ll pay taxes on your Roth contributions, if you’ve held the money in those accounts for at least five years and you’re older than 59 1/12 when you withdraw, you can withdraw Will not pay tax on money received. Of Roths.

If you have a variety of retirement assets (401(k), pensions, other savings), it makes sense to talk to a certified financial planner or accountant to see which tax strategy is best.

Like anything in financial planning, there is no “one size fits all” strategy that works for everyone.

To find a certified financial planner in your area, Check out this site.

Credit: www.forbes.com /

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