How Working After 65 Years Can Affect Your Social Security Benefits And Medicare Awards

0
105

[ad_1]

For a growing number of Americans, "retirement" simply means changing where or how you work.

<p class = "Canvas-Atom-Canvas-Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "More than half of Americans aged 40 and over expect it continue to do paid work upon retirement, according to TD Ameritrade, This includes 86% of those over 50, while a remarkable 92% of those over 40 expect to continue working after reelecting their main careers. "Data-reactid =" 19 "> More than half of Americans over 40 expect this, according to TD Ameritrade, 86% of those over 50 should continue to do paid work after retirement, while a remarkable 92% of those over 40 expect to continue working after returning to the main job.

Some people welcome retired work as a positive choice because they enjoy the mental challenge or socialization that a job offers. Others even take up a later “encore career” and open a new professional chapter.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Of course, money also plays a big role for some people Retired work is the only way to make ends meet. A new report The Transamerica Center for Retirement Studies found that 84% of retired women feel that their motivation is a financial necessity. And if you have your heart for realizing a life dream, we say open a distilleryYou need to carefully examine your expectations for a profit. "data-reactid =" 21 "> Of course, money also plays a big role. For some people, retirement is the only way to make ends meet A new report from the Transamerica Center for Retirement Studies found that 84% of women who want to work in retirement believe that their motivation is a financial necessity. As a distillery, you need to clearly recognize your expectations of making a profit.

If you're planning to retire, financial advisors should consider a few factors.

While we believe that more and more money should be the goal, a lucrative retirement could mean higher taxes and higher health insurance costs – and a possible cut in your social security benefits. "People don't look at how this affects their other sources of income," said Matt Nadeau, a financial advisor at Piershale Financial Group near Chicago.

<h2 class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Bar social security drawing"data-reactid =" 24 ">Bar social security drawing

If you claim social security before you reach full retirement age (that is 67 years for people born in or after 1960), your monthly payment will be reduced. According to popular opinion, you should wait until you reach retirement age to claim if possible.

"With life expectancy increasing, it is becoming increasingly important to consider a social security delay," said Christine Russell, senior manager of retirement and pensions at TD Ameritrade.

If you plan to earn both income and social security benefits between the age of 62 and reaching full retirement age, keep the following in mind: During this period, your social security benefits will decrease by $ 1 for every $ 2 that over $ 17,640 and $ 1 are over $ 46,920 for every $ 3 earned. These deductions cease as soon as you reach full retirement age.

<h2 class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Calculate your provisional income "data-reactid =" 28 ">Calculate your provisional income

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "The government uses a metric called temporary income to determine how much tax do you pay on your social security benefits?, This is calculated by adding wages, dividends and interest (taxable and non-taxable), pensions and 50% of your annual social security benefits. Married retirees who submit together with a combined provisional annual income of less than $ 32,000 do not have to pay federal income tax on their social security benefits, but those who earn between $ 32,000 and $ 44,000 must pay 50% of their social security tax. People with an income of more than $ 44,000 are required to tax 85% of their social security. (Note that this doesn't mean an 85% tax rate – it's just that 85% of the benefit is subject to income tax.) "Data-reactid =" 29 "> The government uses a metric called provisional income to determine how you pay a lot of tax on your social security benefits, This is calculated by adding wages, dividends and interest (taxable and non-taxable), pensions and 50% of your annual social security benefits. Married retirees who submit together with a combined provisional annual income of less than $ 32,000 do not have to pay federal income tax on their social security benefits, but those who earn between $ 32,000 and $ 44,000 must pay 50% of their social security tax. People with an income of more than $ 44,000 are required to tax 85% of their social security. (Note that this doesn't mean an 85% tax rate – it's just that 85% of the benefit is subject to income tax.)

There is an important question you need to ask yourself, Nadeau says: "How does every dollar of work affect my retirement savings?" If you are married and have a file together and your preliminary income is over $ 44,000, 85% of your social security will be taxed. "However, if you control your income a little, if you only work a little less, it may only be taxed 50%," he says.

<h2 class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Consider a Roth conversion"data-reactid =" 31 ">Consider a Roth conversion

<p class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "And remember that you are getting old, Once you reach it, out of 72, your provisional income also includes the required minimum distributions (RMDs) from traditional IRA or 401 (k) accounts. (The SECURE law passed at the end of last year increased the age for RMDs 70½.) If you do the math and find that your RMD income pushes you across the border into higher brackets for taxes and Medicare premiums, financial advisors suggest converting some of these assets to a Roth IRA before you turn 72. "reactid =" 32 "> Note that your provisional income from the age of 72 also includes the required minimum distributions (RMDs) from traditional IRA or 401 (k) accounts (SECURE Act, passed late last year), age Raised to 70½ for RMDs.) If you do the math and find that your RMD income is pushing you across the border into higher brackets for taxes and Medicare premiums, financial advisors suggest turning some of these assets into a Roth IRA before you turn 72 ,

"If they don't work for a year or two, people will do conversions," Russell says, because a drop in earnings that is not yet supplemented by social security benefits could put you in a lower tax bracket. An advantage if you have to pay taxes on funds converted into Roth.

<h2 class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Do the Medicare math"data-reactid =" 38 ">Do the Medicare math

<p class = "Canvas Atom Canvas Text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "How much you earn also has an impact how much you pay for certain parts of Medicare, "Your Medicare Part B premium is based on your taxable income," says Russell. A person with an income of $ 87,000 or less will pay $ 144.60 per month for Part B in 2020, a person with an income of over $ 87,000 to $ 109,000 will pay $ 202.40 per month. The highest monthly premium for people earning $ 500,000 or more is $ 491.60 (note that your 2020 Part B reward is based on your 2018 income.) "Data-reactid =" 39 " > How much you earn also affects how much you pay Certain parts of Medicare: “Your Medicare Part B premium is based on your taxable income.” A person with an income of $ 87,000 or less will pay 144 in 2020 144 $ 60 a month for Part B, but a person with an income greater than $ 87,000 up to $ 87,000 will pay $ 202.40 a month, the highest monthly premium for those who have $ 500,000 Earning or more is $ 491.60 (note that your 2020 Part B award is based on your 2018 income.)

<h2 class = "canvas-atom-canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Contingent liability plan"data-reactid =" 40 ">Contingent liability plan

Finally, experts say you should be realistic about the physical and mental feasibility of the job in later years. Don't assume that you can take on additional debt because you want to work well into the 70s because a health crisis or other problem can disrupt these plans.

"The main reason people thought they could be retired did not have anything to do with health – either their own health or that of a spouse or loved one they needed to take care of," says Russell.

According to a study by TD Ameritrade, Americans want to keep their retirement options open. This is an advantage that can pay off in your planning.

“One of the things that was very encouraging is that most people considered working for mental fitness reasons. They want to work to keep their minds sharp, ”she says.