What Will Happen to Your Social Security Benefits if the Economic Crisis Forces You Back to Work?, by Michael Sesler

The coronavirus has had a massive impact on the United States’ economy, and retirees are not immune to the resulting consequences. The financial crisis has made many retirees consider working for a paycheck again.

Suppose you are a senior considering coming out of retirement to work again. It’s essential to realize that this decision will affect your finances in more ways than just providing an additional source of funds. Going back to work after retiring can affect your Social Security Benefits.

If you’ve already reached full retirement age (FRA), you don’t have to worry about your Social Security Benefits. You can work and earn as much as you can. FRA is within 66 to 67 years, depending on when you were born.

However, if you are below FRA, your Social Security benefits can be reduced if you earn specific amounts working after retirement.

  • If you are still below the full retirement age for the full year, you’ll lose $1 in Social Security benefits for every $2 you earn above $18,240 (limits as of 2020).
  • If you reach FRA sometime in the year, you’ll lose $1 in Social Security benefits for every $3 you earn above $48,600 (limits as of 2020).

The aforementioned earning limits aren’t prorated, so anything you earn after reaching FRA won’t count towards the total you are allowed to earn without affecting your benefits.

These income limits change annually, and the deduction stops once you reach FRA. At full retirement, the SSA will recalculate your monthly benefits to account for the amount of income you lost by earning more money in retirement.

So if you are counting on full Social Security benefits because you need more cash due to the impact of the COVID-19 market crash on your retirement account investment, working may not help you so much. 

Is it Advisable to go Back to Work while Withdrawing from Social Security?

If the coronavirus has dealt a massive blow to your finances, then returning to work wouldn’t be a bad idea – even though it will negatively affect your Social Security benefits. Coming out of retirement to work is more advisable than making massive withdrawals from your already struggling retirement accounts and putting yourself at risk of running out of money in a few years.

This is especially true because even when you lose part of your Social Security benefits for earning too much in retirement, you still get to make money back later. While it may take time to break even for the money you missed out on, you shouldn’t let fear about getting your full checks prevent you from making the best long-term move.

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What Will Happen to Your Social Security Benefits if the Economic Crisis Forces You Back to Work?, by Michael Sesler

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