Timing Your Earnings in Retirement to Optimize Your Social Security Retirement Benefit

If you work after you begin receiving Social Security retirement benefits, all or part of your retirement benefit may be withheld if your earnings exceed the retirement earnings exempt amount. However, excess earnings won't affect your benefit once you reach full retirement age, and it's possible to time your earnings in retirement in order to optimize your benefit.

Example(s): Lewis retired in 2017 at age 62. In 2018, he goes back to work and earns $19,040 working part-time. Since the annual retirement earnings test exempt amount is $17,040 in 2018, Lewis's retirement benefit is reduced by $1,000 the following year ($1 in benefits was withheld for every $2 of excess earnings). If Lewis had reached his full retirement age when he went back to work, his retirement benefit wouldn't have been affected by excess earnings.

Who can benefit from using this strategy?

If you're under full retirement age and earn more than the annual retirement earnings test exempt amount by working after you retire, you may benefit from timing your earnings in retirement.

Tip: Remember, though, if your monthly benefit is reduced in the short term due to your earnings, you'll receive a higher monthly benefit later. That's because the Social Security Administration recalculates your benefit when you reach full retirement age, and omits the months in which your benefit was reduced.

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