Last time we discussed delaying your Social Security Benefits to help you as you work toward maintaining an income for life and one of the ways to do that is to earn extra income until you reach age 70. While you may still be ready to hang up your hat on your career well before then, that doesn’t mean you can’t prolong taking those benefits by taking on a side job.
I had a client of mine—we’ll call him Bob—ended up in this very situation. Bob was ready to move into retirement, yet not wanting to lose the 8% increase of his social security income—remember every year that you delay benefits from age 67 to 70 gives you an 8% increase. While he had a nice nest egg built, he also did not want to run out of money due to inflation. When we looked at Bob’s overall retirement plan, we realized that it made sense for Bob to take a part-time job. Not only would it keep those benefits a bay, but it also would also give him something to do with his free time—after all you can only do so much hunting, fishing or tractor driving!
Having owned his own business as one point, Bob decided to take on some freelance opportunities for the next few years. That allows him to control his hours as well earning the amount of extra income he needs from month to month. By doing so, he adds additional protection against inflation and can utilize less of his retirement income than if he had retired entirely.
Another great reason to earn extra income in retirement is to protect yourself during a market downturn. Otherwise, you might find yourself having to sell investments at a loss just to pay the light bill. The great thing is you’re not limited to what you want to do when you earn extra income in retirement. Job opportunities run the gamut from season jobs to part-time careers. The sky is really the limit. I have some friends whose parents chose to turn their home into a bed and breakfast in order to supplement their retirement plans. Maybe you don’t want to go that far, but you if you could always do an home-sharing service such as Airbnb.
One point to keep in mind, if you do take your Social Security benefits, you are limited to what you can earn if you are under the age of 66. In 2017, if you made more than $16,920 you lost $1 in benefits for every $2 over that amount via adjustments and taxation. Once you reach full retirement age, you no longer have to worry about losing any earnings, for the most part, but there are always exceptions. However, in the year that you reach full retirement age, you still lose some, but it is only $1 for every $3 you earn over $44,880 up until your actual birthday.
If you’re not sure what best suits your situation, contact us. We here to help ensure you are utilizing all the retirement for life strategies that can make your income last. Give us a call, let’s talk.