Taking Social Security While Working

December 9, 2021

Can you take Social Security while working? Here are some key factors you should know if you plan to work while taking Social Security.

What You Should Know About Working While Taking Social Security

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Full transcript:

SPEAKERS

Anthony Saffer & Alex Okugawa

Anthony Saffer 0:00
Can you take Social Security while working? Yes, but there are key factors you’ll want to consider. So you don’t sabotage your retirement, we will discuss stay tuned.

Alright Alex, so taking Social Security while working… Can you? Yes, as long as you’re past the minimum age of 62, the bigger question is, should you?

Alex Okugawa 0:22
There’s some math part of it, right, there’s what is called “breakpoints.” Is it better if I take it at 67, or 68, or 69? Again, I tend to think that those breakpoints are overanalyzed, because it’s largely dependent upon the expiration date on your birth certificate. When you eventually pass away. Unless we all know that exact date, it can be very challenging to get that math exactly right.

Anthony Saffer 0:47
So it’s important to know that every year you wait to take Social Security and defer, the benefit goes up, and that lasts for the rest of your life. Conversely, if you take it early, there’s a reduction of benefits.

Alex Okugawa 0:57
Yes. Now, can you take it while you’re working? Yes, but here’s the thing. The benefits of this are usually based upon your full retirement age. So let me give you an example. Let’s say you are working and you take benefits, Social Security benefits before your full retirement age, you’re basically going to be hit with two things. One, you’re going to be hit with a reduction of lifetime benefits, because you took Social Security before your full retirement age. So that’s hit number one. Hit number two is because you’re earning an income, you have wages, then social security is going to look at your income sources and go,”You really didn’t need these benefits, so we’re actually going to reduce these benefits even further”. Now, that second piece, you will recoup it over time, but it can take a long time. I mean, it might be like age 85 until you recoup some of those benefits. that was lost by your wages while you were working before full retirement age.

Anthony Saffer 1:51
Yeah, it really is a penalty. If you’re not at your full retirement age, it’s not often advisable if you’re earning any sort of substantial income to take Social Security.

Alex Okugawa 1:59
Here’s the thing though, is that if you’re working after full retirement age, then you don’t have to worry about this reduction nonsense, right. So that’s where folks will ask, “I can’t take benefits, because I’m still working” Well, you’re already past full retirement age so technically, you could.

Anthony Saffer 2:17
So talk about the coordination of other retirement income sources. Even if you’re still earning a paycheck, let’s say you are past your full retirement age, why you might want to wait and how you want to coordinate.

Alex Okugawa 2:26
This is where we help folks because most people, look at social security benefits in a box. They only look at these benefits, and try and figure out how do I maximize Social Security. They totally forget about their entire financial picture, they forget about their investment accounts, right? You’re going to likely have required minimum distributions from an IRA account when you turn 72. How is that going to impact your income? How’s it going to impact your taxes? So then when you forget about all those things, you might be forgetting about rental income? And what’s my rental income going to be? Do I have private pensions, etc.? So a failure to look at the entire comprehensive picture of your finances can really have a negative impact on the best timing for your Social Security. It’s not just always about Social Security.

Anthony Saffer 3:15
So coordination of your retirement income is an important decision. I mean, you’ve worked hard for it, you’ve paid into it, coordinating that with your other retirement income sources, what age to take it and if you’re still working. These are all important things that can be worked through in a good financial plan. These are the types of things that we help people with. If you go to one degree advisors.com You can schedule a quick call with us. We’d love to talk to you

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