Social Security retirement benefits and ‘unretirement’: what to know


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A combination of high inflation and job openings may entice some retirees to return to work.

But whether you’re considering going back part-time or full-time, if you’re already collecting Social Security retirement benefits, there are a few things you might want to know first.

According to Joe Elsasser, founder and president of Covisum, a provider of Social Security claiming software, Social Security beneficiaries who return to work can earn more in the short term and eventually increase their monthly benefits checks as well.

But they can also be subject to short-term changes in benefits that are worth planning for. “That’s the surprise people want to avoid, not knowing the income test is going to happen and they’re going to be fined,” Elsasser said.

Here are a few things you should know about your Social Security benefits before you retire.

1. Your allowance may be temporarily reduced

If you are older than your full retirement age, you do not have to pay an income supplement when you return to work.

“They can earn as much as they want and they can collect Social Security checks,” Elsasser said.

The full retirement age is 66 to 67, depending on your year of birth. The Social Security Administration’s retirement age calculator can help you determine the age at which you qualify for full benefits.

“In the calendar year that you reach full retirement age, you really have a lot more flexibility to work and earn an income, and the penalty is also less,” Elsasser said.

Even though benefits are reduced for the wage penalty, those who return to work can still earn more in the short term, and later when their benefits are increased.

2. You can get a larger benefit later

If you receive a payroll tax credit, your benefit will be recalculated later and that may mean a larger monthly check.

Take someone with a $2,000 Social Security check who went back to work and made $40,000. Based on the payroll fine, they may not get a Social Security check for the first five months of the year, according to Elsasser, but they will receive their $2,000 benefit in the remaining months.

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Once that worker reaches full retirement age, the Social Security Administration adds up the months in which they have not received benefits due to the payroll penalty. Then it will adjust the worker’s benefits as if they had later claimed to account for that time.

Ultimately, their benefits are increased as if they had deferred benefits, Elsasser said.

“That’s the most important thing to remember: it’s not a tax,” Elsasser said of the profit penalty. “Benefits are not lost, your benefit is recalculated when you reach full retirement age.”

3. Tell Social Security about your return to work

If you plan to return to work, report it immediately to the Social Security Administration, Elsasser advised. That way, the agency can now start reducing your checks.

If you don’t, you could be in for an unwelcome surprise early next year when the IRS reports your income to the Social Security Administration.

If that happens, you could get an unexpected letter from the Social Security Administration informing you that they will immediately stop your benefits until any payroll fine from the previous year is made up.

That can disrupt your cash flow when you least expect it.

The Valley Voice
The Valley Voice
Christopher Brito is a social media producer and trending writer for The Valley Voice, with a focus on sports and stories related to race and culture.


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